The ‘sell-the-news’ pullback following the launch of the first spot Bitcoin (BTC) exchange-traded funds (ETFs) in the U.S. has morphed into a ‘buy-the-dip’ opportunity for investors as the top crypto trades near a two-year high while inflows into digital asset investment products trend sharply higher.
The week ending Feb. 9 saw a total of $1.12 billion flow into globally listed crypto funds, according to the latest fund flows report from CoinShares, bringing year-to-date inflows to $2.7 billion.
“Coupled with recent price rises, total assets under management (AuM) is at the highest level since early 2022 at US$59bn,” said James Butterfill, CoinShares’ head of research.
Bitcoin accounted for 98% of the inflows with roughly $1.09 billion being invested in these products, “while the price appreciation also buoyed sentiment for Ethereum and Cardano, which saw US$16m and US$6m respectively,” Butterfill said. “Minor inflows were seen in Avalanche (US$0.5m), Polygon (US$0.4m) and Tron (US$0.4m).”
Uniswap and Short-bitcoin were the only ones to see notable outflows totaling $0.5 million and $0.4 million, respectively. “While blockchain equities saw outflows, these were from one issuer (US$67m), while all other issuers saw inflows totaling US$19m,” Butterfill said.
The U.S. was the primary region of interest thanks to the focus on the newly launched Bitcoin ETFs, accounting for $1.1 billion of the total inflows and bringing the aggregate increase since the Jan. 11 launch to $2.8 billion.
“The outflows from incumbents have slowed significantly, but the potential sale of the Genesis holdings of US$1.6bn could prompt further outflows in the coming months,” Butterfill warned. “Outflows from other regions have cooled off, with minor outflows from Canada and Germany totalling US$17m and US$10m respectively,” he said. “Switzerland, on the other hand, saw US$35m inflows last week.”
Those expecting a decline in interest will need to wait at least another week after data provided by Farside Investors showed that a total of $493 million flowed into the U.S.-listed spot BTC ETFs on Monday as Bitcoin’s price spiked above $50,000 for the first time since Dec. 2021.
Yesterday's ETF inflows (source @FarsideUK)
It was "only" $493 million, need to pump those numbers up, those are rookie numbers.
$374 million by Blackrock. Biggest surprise might be the 2nd negative day by Invesco Galaxy Bitcoin ETF $BTCO. $GBTC with $95 million outflows… pic.twitter.com/IqJFjEYWjm— WhalePanda (@WhalePanda) February 13, 2024
But this also means that traders should exercise caution when buying at these prices as the rally has tipped sentiment into extreme greed territory, which has historically led to a significant pullback as FOMO kicks in while patient traders use the opportunity to book profits.
