Bitcoin ETF snapshot: Week’s inflows hit highest mark since March

Spot bitcoin ETFs saw their best inflow week in two months as a consumer price index report last week seemed to ease concerns weighing the asset down.

The US fund category collectively notched $948 million in positive net flows from May 13 to May 17, according to Farside Investors data.  

This was the highest total during a single week since the fund segment welcomed more than $2.5 billion to its coffers between March 11 and March 15.

Analysts attributed the subsequent drying up of demand in April to profit-taking and the Federal Reserve’s anticipated higher-rates-for-longer approach.  

Read more: Strong start, slowing demand: The first 4 months of US spot bitcoin ETFs        

But April’s consumer price index (CPI) print, published Wednesday, came in cooler than expected at 0.3% month-on-month, according to Ryze Labs analysts — compared to the market expectation of 0.4%.

“This has quelled rumors of a potential rate hike and paves the way for [Fed Chair Jerome] Powell to consider a rate cut in the coming months,” the analysts wrote. 

Rate expectations had been one factor seeming to weigh down bitcoin’s price in recent weeks. The cost of one BTC dropped to as low as about $57,000 on May 1 following its new all-time high of more than $73,000 reached in mid-March.  

Bitcoin’s price rose to around $67,000 on Friday and remained around that level on Monday morning. 

James Butterfill, head of research at CoinShares, noted the vast majority of the inflows (more than 80%) came in the week’s final three days after the CPI print. This highlights the company’s view that BTC prices “have recoupled to interest rate expectations,” he wrote in a Monday report.

The $948 million of net inflows into spot bitcoin ETFs nearly equaled the net money exiting the funds over the previous last five weeks. From April 8 to May 10, the category endured net outflows of $931 million, Farside Investors data shows.

Notably, it was the first week of net inflows — albeit just barely — for the Grayscale Bitcoin Trust ETF (GBTC). 

That fund’s $17.6 billion of net outflows over the last four-plus months have weighed down the segment, which has now hit about $12.6 billion of combined positive net flows.

The inflows came during a week in which more institutional investors revealed their holdings in such funds. The Securities and Exchange Commission requires institutional investment managers to disclose their holdings quarterly in what are known as 13F filings. 

Segment observers have recently found out, via the disclosures, that Wisconsin’s Investment Board bought 2.4 million shares of BlackRock’s iShares Bitcoin Trust (IBIT) and over a million shares of GBTC. Hedge fund Millennium Management revealed owning about 20 million IBIT shares worth more than $844 million.

Read more: How are advisers using bitcoin ETFs in client portfolios? It depends.

In all, the 13Fs showed that more than 400 institutional investors hold IBIT. 

The disclosures reflect the institutional participation that bitcoin ETFs had expected to unlock, noted Anchorage Digital CEO Nathan McCauley. 

“From hedge funds and endowments, to governments and pension funds, traditional players are driving hundreds of millions of dollars in ETF inflows,” McCauley added in a statement. “As bitcoin liquidity increases, expect more institutions to participate in crypto through safe and secure infrastructure.”

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