The approval of the Spot Bitcoin ETF in January marked a significant milestone for cryptocurrency investors. The SEC, recognizing the inevitability of the situation, finally conceded to approve the ETFs, ending a long period of anticipation and speculation. The key question now is how ETF inflows will fare and whether the cryptocurrency market will sustain its upward trajectory.
Following the approval, the market reacted unexpectedly with GBTC sales causing a stir, contrary to the belief that ETF approvals would lead to a surge in institutional investments. Despite a massive $5.2 billion outflow from GBTC, the overall ETF market saw a net inflow of nearly $800 million, suggesting a strong institutional interest in cryptocurrency funds.
While GBTC’s reserves plummeted, BlackRock and Fidelity ETFs experienced a substantial $4.5 billion influx, demonstrating a redistribution of investments within the ETF landscape. Excluding GBTC, other spot Bitcoin ETFs hold reserves nearing $6.5 billion, indicating a healthy market despite GBTC’s outflows.
The market’s resilience is partly due to the diminishing outflows from GBTC, which has helped Bitcoin’s price to recover. The consistent inflows into other ETFs have alleviated fears of a massive sell-off from GBTC’s $20 billion reserves, fostering a more optimistic outlook for Bitcoin’s future.
The net daily inflow from just two ETFs, Fidelity and BlackRock, surpasses the daily Bitcoin production by miners, hinting at a significant demand for Bitcoin. If these inflows persist post-April’s halving, the demand from these two ETFs alone could be 20 times the daily miner output, excluding other corporate demands. This sets the stage for a potential six-figure valuation for Bitcoin in the foreseeable future.