Bitcoin ETFs Inflows Score 21-Day High of $295M Amid German Sell-Off
BTC ETFs have had another record day of inflows. (Credit: Hameem Sarwar @ CCN)
- U.S. spot BTC ETFs recorded $294.8 million inflows, a 3-week high.
- The German government’s BTC sell-off continues to apply downward pressure to the crypto market.
- Spot Ethereum (ETH) ETFs could begin trading in the coming weeks.
Institutions appear to be buying the dip as U.S. spot Bitcoin (BTC) exchange-traded funds (ETFs) witnessed their largest daily net inflows in 21 days.
As the German government begins to transfer some 26,200 BTC to exchanges and market makers, and Mt. Gox sets out to repay $8.5 billion in BTC to creditors, it seems that supply shock is beginning to take hold. But this hasn’t deterred BTC ETF investors.
BTC ETF Performance
As per data from Farside Investors, BTC ETF inflows hit a 3-week high, drawing in $294.8 million on July 8, 2024. This also marks the first day in 3 trading weeks for net inflows to be in the black (or green) for all funds.
Totalling 49.32 BTC, the institutional investors continue to buy the dip. BlackRock’s iShare’s Bitcoin Trust ETF (IBIT) was the biggest gainer, drawing $187.2 million.
Fidelity’s Wise Origin Bitcoin Fund (FBTC) posted inflows of $61.5 million, Bitwise Bitcoin ETF (BITB) scored $11 million, and ARK 21Shares Bitcoin ETF (ARKB) posted gains of $8.4 million.
VanEck Bitcoin Trust (HODL) posted a modest $1.6 million in gains. Notably, the Grayscale Bitcoin Trust (GBTC) managed to draw in $25.1 million, though this does little to offset the $28.6 million in outflows recorded on July 5.
The price of Bitcoin may have benefited from the institutional buying streak, returning to the $57,000 price mark after falling below $55,000 on July 8, 2024.
Selling Pressure Mounts
It’s believed that the German government’s sell-off of 26,200 seized BTC tokens is placing a great deal of downward pressure on the markets at the moment.
As per on-chain analytics firm, Arkham Intelligence, the German govt is moving huge portions of these tokens to exchanges such as Kraken, Cumberland, and others.
It’s also believed that many of these tokens are making their way to institutional/OTC markets.
Regardless, the sell-off is having a ripple effect on retail investors who are now panicking to offload their BTC before it dips further. In doing so, they are creating the perfect opportunity for ETF funds and institutions to buy up BTC at a discount.
Losing Streak Over For Bitcoin ETFs?
As per data from Fariside Investors, spot BTC ETFs saw a net inflow of $143.1 million on July 5, 2024.
The surge in buying activity follows BTC’s declining price, which fell to around $54,000 on July 4. Considering Bitcoin ETFs’ underwhelming June, which saw the reigning crypto king chopping sideways, major institutions are eager to buy the dip in July amid the panic.
Extrapolating the numbers, FBTC led the charge, adding $117.4 million to its fund. Bitwise’s BITB drew a modest $30.2 million, and the ARKB and HODL gained $11.3 million and $12.8 million, respectively.
GBTC was unable to break from its outflow trend, shedding $28.8 million from its fund.
Bitcoin Sell-Offs
Last week, Mt. Gox moved approximately $2.7 billion worth of BTC in preparation for said payouts, creating some fears that a gigantic sell-off will soon come to apply even more downward pressure on the market.
Coupled with Germany’s $3.5 billion sale of seized Bitcoin tokens, markets recently witnessed the second-largest liquidation event in Bitcoin history after FTX.
Still, despite the wave of bitcoins about to crash into the market, there still seems to be not enough for institutions, who have already accumulated nearly $50 billion in the first half of the year.
In 2024, it would seem that BTC markets may finally experience a supply shock. This is mainly due to Bitcoin miner reserves plummeting to their lowest levels in over a decade and institutional appetite outpacing the production of new BTC tokens.
There are also concerns that over-the-counter (OTC) markets may not recover from their 2-year-long decline. Between July 2022 and July 2024, OTC desk balances consistently fell, eventually slumping to all-time lows of under 200k BTC.
However, as per data from CryptoQuant, this figure has witnessed a dramatic increase, spiking up above 300k BTC in the past couple of months.
OTC markets tend to see increases when Bitcoin prices peak. Typically, institutional investors are the ones to use OTC desks as they can execute large transactions without impacting market price.
But remember, correlation doesn’t mean causation. While increased BTC accumulation could mean that OTC desks are buying on behalf of their clients, it could also mean that clients are moving their BTC to said desks so they can be sold.
Good Timing For Bitcoin?
With myriad dynamics affecting the Bitcoin and crypto markets, investor excitement is mounting around the potential approval of U.S. spot ETH ETFs, which are anticipated to be approved this month.
Giving weight to that claim, U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler has noted that the application process is going smoothly. Oddly, only one fund issuer, Bitwise, has filed the all-important S-1 amendment.
The question now is, which way is the price of Bitcoin headed? If you subscribe to the Power of 3 (PO3 ) concept, July could be the beginning of a very bullish trend.
Following the Bitcoin halving, BTC traded sideways within the $60k/$70k range. Arguably, last week, we witnessed the manipulation phase, which implies that we could see the distribution phase begin in the coming days. This could cause the price of BTC and other cryptos to rise in the coming days or weeks.
Though it coincidentally aligns with the looming prospect of ETH ETFs being approved, the billions of dollars worth of Bitcoin being distributed or sold by Mt. Gox, Germany, and other major players may continue to plague its performance throughout the month.
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