Key Points
- Bitcoin ETFs noted a record $555.9 million inflow on October 14, the largest since June.
- These ETFs hold 869,000 BTC, approximately 4% of Bitcoin’s circulating supply.
On October 14, Bitcoin ETFs experienced unprecedented inflows, totalling $555.9 million. This is the most substantial daily net inflow since June, as reported by Farside Investors.
The surge in ETF interest happened simultaneously with Bitcoin reaching a two-week peak, trading at $66,500.
Leading ETFs
Fidelity’s FBTC spearheaded the surge, registering a remarkable $239.3 million, its highest inflow since June 4. Other noteworthy ETFs include Bitwise’s BITB with inflows of $100.2 million, BlackRock’s IBIT at $79.5 million, and Ark 21Shares’ ARKB with nearly $69.8 million.
Grayscale’s GBTC experienced its first influx in October, at $37.8 million, the most substantial since May.
Since their introduction in January, BTC ETFs have accumulated a significant $18.9 billion net inflows. Excluding GBTC, the nine new Bitcoin ETFs owned around 646,000 BTC, with GBTC contributing 223,000 BTC to the total. These funds hold 869,000 BTC, about 4% of Bitcoin’s circulating supply.
ETF Market Growth
The ETF sector has seen extraordinary growth this year, with around 2,000 launches. This includes leading funds like BlackRock and Fidelity. However, despite the recent growth, BTC ETFs only represent a small portion of the total Bitcoin trading landscape.
On October 11, the Bitcoin Futures market recorded $53.4 billion in trades, with the spot market reaching $4.5 billion, according to Checkonchain data. In contrast, ETF trades totalled just $2 billion, capturing approximately 3% of the day’s overall BTC market volume.
Major institutions like Goldman Sachs and Jane Street Capital are involved in creating and redeeming ETF shares, which stabilises the ETF’s price and liquidity. Hedge funds, such as Millennium Management and Capula Management, use “basis trading” strategies to profit from discrepancies between Bitcoin’s spot and futures prices.
However, not all large holders engage in basis trading. For instance, the State of Wisconsin Investment Board holds the ETF for purposes like portfolio diversification. Yet, Bernstein, a private wealth management firm, suggests that basis trades could act as a “Trojan horse” for broader adoption, as increased liquidity and trading volume may encourage investors to adopt long-term positions in Bitcoin.
If options tied to IBIT are approved and physically settled, it would attract more sophisticated investors. Strategies like covered calls would allow investors to generate passive income, while miners could use these options to hedge their holdings. These factors could bring more maturity and volume to the Bitcoin ETF market.
