Last Friday, a massive inflow of capital into U.S. spot Bitcoin exchange-traded funds (ETFs) resulted in a net inflow of $263 million.
This is the largest daily inflow on July 22, and appears to be a result of renewed interest in Bitcoin after it rose over 12% over the past week to reclaim $60,000.
The largest inflow came from Fidelity’s Bitcoin ETF (FBTC), which received $102 million on the day, bringing its weekly inflow to $218 million.
Before the strong rebound, FBTC experienced two consecutive weeks of outflows, with a total of $467 million in losses.
ETFs of Ark Invest and 21Shares also recorded net inflows
Ark Invest and 21Shares’ Bitcoin ETF, ARKB, followed with the second-highest net inflows among Bitcoin ETFs, taking in around $99 million per day.
In addition, capital has flowed into Bitcoin ETFs launched by operators such as Bitwise, Franklin Templeton, Valkyrie, VanEck, and Grayscale, suggesting an overall increase in interest in the U.S. spot Bitcoin ETF market.
However, not all funds have been so successful
Both BlackRock’s iShares Bitcoin Trust (IBIT) and WisdomTree’s Bitcoin Fund (BTCW) recorded net inflows of zero on Friday.
IBIT in particular has struggled over the past few weeks, with several consecutive days of zero inflows and two net outflows, on August 29 and September 9 respectively.
IBIT has only recorded net capital outflows for three days since its launch, making it one of the funds with a very unusual net outflow among Bitcoin ETFs.
Despite mixed performance across funds, all U.S. spot Bitcoin ETFs ended the week with net inflows of more than $400 million, a sign that investor sentiment is recovering across the cryptocurrency market.
The surge in Bitcoin prices and strong ETF inflows could be interpreted as growing optimism among investors.
Coin Market Rally Resumes?
The broader cryptocurrency market, as well as the United States, has enjoyed a recovery.
Bitcoin, which was trading at around $54,300 at the start of the week, rose to $60,000 on Friday. It is currently trading at around $58,700 after a slight decline.
Other major cryptocurrencies followed Bitcoin’s lead and recovered. Ethereum rose 8% over the week to $2,400 before falling back to the $2,200 range today.
However, according to Ark Invest’s report, despite the recent rally, the average price of Bitcoin ETF investors is still higher than the market price. It can be assumed that many of the investors who invested early are holding their positions at a loss.
Ark Invest’s report went on to point out that Bitcoin’s long-term fundamentals are solid and that the Market Value Volume (MVRV) Z-Score, an indicator that compares Bitcoin’s market capitalization to its average price, suggests that Bitcoin is still undervalued, giving it an optimistic outlook for the future.
Industry experts say the recent surge in the prices of Bitcoin and other cryptocurrencies is due to expectations of a potential interest rate cut by the U.S. Federal Reserve.
With the consumer price index coming in at 2.5% year-on-year, below expectations, many investors are predicting that the Fed will cut interest rates by 25-50 basis points at its next meeting on September 18.
Potential monetary policy easing and similar moves by the European Central Bank and the Bank of Canada could continue to drive optimism in the crypto markets going forward.
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