Institutional investors have finally started to throw their weight around in the crypto market as demand for the nearly 2-month-old spot Bitcoin (BTC) exchange-traded funds (ETFs) continues to hit new record highs, led by BlackRock’s iShares Bitcoin Trust (IBIT).
According to market analyst HODL15Capital, IBIT’s trading volume surpassed $1 billion before noon on Monday, while BITO, GBTC, and FBTC had seen volumes of $590 million, $566 million, and $471 million, respectively.
While Bitcoin has yet to surpass its all-time high in U.S. dollar terms, numerous other currencies have succumbed to the power of King Crypto, including the Japanese yen, the Malaysian ringgit, the Indian rupee, the new Taiwan dollar, the South Korean won, the Chilean peso, the Australian dollar, the Chinese yuan, the South African rand, the Norwegian krone, and the Turkish lira.
Monday’s surge resulted in the Euro becoming the latest currency to relinquish a new ATH for BTC, and it now looks as though it is only a matter of time before the USD follows suit.
#Bitcoin hit an ATH in Euro on ETF-led demand. pic.twitter.com/oXd63RTweT
— Holger Zschaepitz (@Schuldensuehner) March 4, 2024
Four of the top 13 commodity ETFs are now Bitcoin ETFs, and last week, IBIT surpassed iShares Silver Trust (SLV) to become the third-ranked commodity ETF by assets under management.
Bitcoin ETFs are moving up the Commodity ETFs leaderboard.
Note the YTD performance difference of $IBIT $FBTC $ARKB $BITB vs. $GLD $IAU $SLV $GLDM $PDBC $SGOL $DBC $USO $UNG pic.twitter.com/fg3vl4AJTj— HODL15Capital ?? (@HODL15Capital) March 3, 2024
Gold ETFs are still the clear leader when it comes to assets under management (AUM) as the iShares Gold Trust (IAU) holds $25 billion in AUM while SPDR Gold Shares (GLD) holds $53.8 billion in AUM, but the fact that IBIT accumulated $10 billion in AUM in roughly 30 days of trading suggests that it might not be too long until it challenges the GLD for its spot at number one.
While the Bitcoin ETFs have been given credit for the rapid price rise seen over the past month, economist E.J. Antoni posted the following tweet highlighting the excessive amount of money printing being done by the Federal Reserve, which has helped push crypto and stock prices to new highs.
Treasury borrowed $103 billion in just the last 4 days, pushing federal debt to new record high of $34.471 trillion; Yellen is on track to borrow $2.8 trillion this calendar year and $3.1 trillion this fiscal year - w/ a compliant Fed, inflation is here to stay... pic.twitter.com/5YPRyTlpKk
— E.J. Antoni, Ph.D. (@RealEJAntoni) March 1, 2024
Monday’s ETF volumes and Bitcoin price gains were forecast by Markus Thielen, Head of Research at 10x, who posted a note titled, "Everybody Will Be Astonished by Bitcoin’s Price Action This Week,” on Sunday.
“Bitcoin had the biggest move ever in February as prices rose by 18,615 dollars per Bitcoin,” he said. “This is more than Bitcoin was worth fifteen months ago – or expressed in %, that was a +43% move. Naturally, institutions' buying slowed down the last 1-2 days of the month, but Bitcoin didn’t decline on Friday.”
While trading volumes declined on Friday, Thielen predicted inflows into IBIT would resume this week, which is precisely what occurred on Monday. And it's not just US-based ETFs that are buying, he noted, as “Volumes in Korea have also exploded from less than $1bn to five consecutive days at or near $8bn.”
“There is a wave of retail activity occurring from altcoins to meme-coins,” he said. “Everybody knows about Bitcoin and activity is spreading, BlackRock also launched a Bitcoin ETF in Brazil last week. More will follow. Hong Kong could list them soon and Chinese investors could buy them directly through their Southbound connect. The flows are not drying up as investors feel more confident the higher price appears to go.”
Thielen pointed out that the “US national debt increases by $1 trillion every 100 days,” which is “slightly less than the market capitalization of Bitcoin.”
“We are witnessing the devaluation of monetary economies on a massive scale through their endless spending programs with no long-term benefits,” he said. “Alternative assets are performing well, but gold and real estate can be taxed, confiscated, and made illegal to hold. Governments are unable to prevent citizens from holding and storing secretly Bitcoin.”
Further proof of the rising demand can be found by examining data released by over-the-counter (OTC) trading desks, which shows that their BTC balances have decreased from nearly 10,000 Bitcoins in Q2 2023 to less than 2,000.
“This shows that institutions such as the Bitcoin ETF issuers through their market makers will have to purchase Bitcoins directly from exchanges,” he said. “The supply/demand imbalance is 1:10 (daily mined vs. daily ETF demand).”
The Bitcoin balance held on exchanges has also decreased by 63,000 BTC during the last 30 days, with Coinbase’s holdings declining from 400,000 to 372,000, while Binance saw a decline of 20,000 to 540,000.
“We suspect that many new inflows from retail and institutions are based on a fixed dollar amount,” Thielen said. “Therefore, investors might not be price sensitive – especially since the common perception is that the halving is bullish for Bitcoin. We also suspect that Bitcoin will make a new all-time high THIS WEEK.”
“Price action during the weekend is always important to follow and while attempts have been made (again) to liquidity leveraged long positions, there are no sellers,” he concluded. “This means the price can only go up – ALL-TIME HIGHS ARE COMING.”
At the time of writing, BTC trades at $67,190, an increase of 7.1% on the 24-hour chart and 3.3% below its all-time high of $69,000.
BTC/USD Chart by TradingView
