On October 17, 2024, U.S. spot Bitcoin exchange-traded funds (ETFs) achieved a remarkable milestone, surpassing $20 billion in total net flows. This achievement stands in stark contrast to Bitcoin’s current price struggles, which have left the cryptocurrency trapped in a seven-month downtrend. With Bitcoin (BTC) hovering around $67,123, the juxtaposition between the growth of ETF inflows and Bitcoin’s stagnant price raises intriguing questions about market dynamics.
According to Eric Balchunas, a senior ETF analyst at Bloomberg, crossing the $20 billion threshold is “the most difficult metric to grow” for ETFs. Balchunas noted on X (formerly Twitter) that, despite the impressive inflows, Bitcoin’s price has not risen above $68,300 since June. This persistent downtrend has lasted since March, indicating a period of significant volatility and uncertainty for Bitcoin investors.
Rapid Growth of Bitcoin ETFs Compared to Gold
The rapid ascent of U.S. spot Bitcoin ETFs is noteworthy, taking just ten months to reach the $20 billion net flow milestone. In comparison, gold ETFs required approximately five years to achieve a similar figure. This acceleration highlights the substantial investor interest in Bitcoin, even as the price languishes.
The recent uptick in ETF inflows began on October 11, following three consecutive days of net negative outflows. This shift was significant, with over $253 million in cumulative net inflows marking the start of a four-day winning streak for Bitcoin ETFs. By October 16, U.S. ETFs had accumulated more than $458 million worth of Bitcoin, according to data from Farside Investors.
As a result of these continued inflows, Bitcoin ETFs have now amassed over $65.4 billion in cumulative on-chain Bitcoin holdings, representing 4.9% of the current circulating supply of Bitcoin. Dune data reveals that this growing demand for ETFs could indicate a shift in how investors are viewing Bitcoin, particularly as a stable asset in the current economic climate.
Can Historical Trends Spark a Rally?
Despite the current downtrend in Bitcoin’s price, some analysts remain optimistic about a potential rally. Historical data suggests that Bitcoin tends to perform well in the fourth quarter, especially in halving years like 2024. Analysts are predicting a possible rally to $92,000 starting this month, based on past performance patterns and Bitcoin’s average monthly returns.
Historically, Bitcoin has averaged 21.47% returns in October, 46.8% in November (its best month), and 5.4% in December. In the previous halving year of 2020, Bitcoin experienced a significant rally, with prices rising over 27% in October and more than 42% in November. This precedent fuels speculation that a similar trend could unfold in the coming months, making the current ETF inflows even more significant.
Also Read: Robinhood Unveils Bitcoin & Ethereum Futures With 24-Hour Trading – Stock Jumps 2.49% After-Hours
A Divided Market
The divergence between the surging popularity of Bitcoin ETFs and the cryptocurrency’s price stagnation reflects a complex market landscape. While investor confidence in BTC remains robust—evidenced by substantial ETF inflows—external factors continue to exert downward pressure on its price.
As we head into the fourth quarter, all eyes will be on Bitcoin’s performance and whether it can leverage historical trends to stage a much-anticipated rally. Investors will need to navigate these tumultuous waters carefully, balancing ETF growth against the backdrop of ongoing price volatility. With the cryptocurrency landscape evolving rapidly, the interplay between ETF inflows and Bitcoin’s price will be critical in shaping the future of digital assets.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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