Bitcoin ETFs garner almost $130M inflows, fueling bullish July outlook

On Monday, the eleven U.S. spot bitcoin exchange-traded funds(Bitcoin ETFs) reported a total daily net inflow of $129.45 million, marking the fifth day in a row of positive flows. This is the largest since early June, following withdrawals of more than $900 million over the month.

Singapore-based QCP Capital  states that “Bitcoin has a median return of 9.6% in July and tends to bounce back strongly, especially after a negative June (-9.85%). Our options desk also saw flows positioning for an upside move last Friday into the month-end, possibly in anticipation of the ETH spot ETF launch. Many signs point to a bullish July.”

Source: SosoValue

According to SosoValue data, Fidelity’s FBTC led the inflows yesterday with $65 million, followed by Bitwise’s BITB, which registered $41 million. $13 million in net inflows were recorded by Ark Invest and 21Shares’ ARKB. Invesco, Galaxy Digital, VanEck, and Franklin Templeton funds experienced comparatively little inflows of approximately $5 million.

The two largest spot bitcoin ETFs by net asset value, BlackRock’s IBIT, and Grayscale’s GBTC, experienced no inflows on Monday.

On Monday, the 11 bitcoin funds had a trading volume of over $1.36 billion. Since the ETFs’ launch in January, they have amassed a net inflow of $14.65 billion.

How a spot ETF maintains its price

A spot ETF’s price may differ from the underlying asset’s actual value. Authorized participants, or APs, can create or redeem large blocks of shares to align the fund with the asset’s actual value. APs are usually big banks that take advantage of the arbitrage opportunity that arises when the price of an ETF is more significant or lower than the underlying asset’s value.

Also Read: Bitcoin may have hit bottom, discount on the Coinbase Premium Index shows

On January 10, the SEC approved eleven spot Bitcoin ETFs, signaling a change in how authorities view cryptocurrencies. The SEC has received a flurry of new applications for clearance, indicating that more spot Bitcoin ETFs might be in the works.

Will spot Bitcoin ETFs affect the price of Bitcoin?

The price of Bitcoin dipped by almost 1% over the past 24 hours to $62,778. It has fallen since reaching a record high of about $74,000 in mid-March due to a spike in interest from new spot exchange-traded funds.

Bitcoin is adding and bouncing off the lower boundary of the downward channel. The price is likely moving towards the upper boundary at $67K. However, cautious buyers may prefer to wait for confirmation with the price rising above $72-73K—the pivot area of the last four months—which would confirm the start of a new impulsive wave of growth.

Alex Kuptsikevich, an analyst at FxPro.

Just recently, Michael Dell, Dell’s founder and CEO, sparked engagement by launching a Twitter poll where respondents chose between “AI,” “Bitcoin,” “love and relationships,” and “none of the above” as the most important thing.  Bitcoin emerged as the preferred option, capturing 43.1% of the 64,035 votes.

Over time, the availability of spot Bitcoin ETFs could encourage broader adoption among institutional and retail investors, including retirement and 401(k) plans. This could gradually increase demand for Bitcoin as an alternative asset class.

Also Read: Bitcoin rises above $71k after massive inflows into spot ETFs

With more liquidity in the Bitcoin market due to ETFs, Bitcoin’s price could have a positive impact. The finite supply of Bitcoin (21 million) combined with increasing demand from ETFs could drive prices higher in the long term.

As Bitcoin becomes more integrated into traditional financial systems through ETFs, it may gain legitimacy and stability, potentially reducing volatility over the long term.

Overall, while short-term volatility and price movements can be influenced by speculative trading and market reactions to the news, the long-term prospects for Bitcoin’s price could benefit from increased accessibility and adoption facilitated by spot Bitcoin ETFs.

Cryptopolitan Reporting by Florence Muchai