BlackRock's Bitcoin ETF Breaks Net Inflows Record; Will The Bull Run Continue?

In early 2024, the Securities and Exchange Commission (SEC) allowed 10 spot Bitcoin exchange-traded funds (ETFs) to begin trading in a landmark decision. The ETFs were sponsored by some of the largest asset management companies in the world, such as BlackRock Inc. and Fidelity Investments. These companies have brought new attention and investment to Bitcoin, allowing the token to reach all-time highs.

The ETFs were designed to bridge the gap between crypto enthusiasts and stock market investors. Before, the only way to purchase Bitcoin was through a crypto brokerage or a wallet. However, the new spot ETFs allow you to get exposure to Bitcoin through an equity product that can be bought on the stock market. This allowed new investors, such as financial advisers, to begin buying Bitcoin without the hassle of creating new accounts.

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The ETFs have been largely successful, propelling Bitcoin to a new all-time high of nearly $70,000 on March 5. This may be because of the huge amount of inflows that the ETFs have seen. As more people buy shares of the ETFs, the companies are forced to buy Bitcoin to keep up. This has resulted in huge amounts of buying activity for Bitcoin.

On March 5, when Bitcoin reached a new all-time high, the BlackRock ETF (IBIT) saw a record inflow of $788.3 million in a single day. This meant that BlackRock had to buy over 11,000 Bitcoins, which likely brought Bitcoin to its new high. 

While BlackRock's ETF saw huge inflows, the net inflows across all ETFs were slightly less, totaling just under $650 million. This is because of the large number of sellers on Grayscale Bitcoin Trust's (GBTC) ETF, as arbitrage players are looking to exit and secure profits, as well as the high fees the ETF charge that are causing some to invest in other funds.

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Eric Balchunas, a senior ETF analyst at Bloomberg, notes in a post on X  that the 10 ETFs had a combined volume of over $10 billion on March 5 for the first time. He also noted that "these are bananas numbers for ETFs under 2 months old."

Though the ETFs have seen huge inflows during their first months of trading, many analysts are wondering whether the momentum can continue. Some believe that the current run is in anticipation of the upcoming Bitcoin halving, which is expected to occur in April and could be a sell-the-news event. New spot Ethereum ETFs are also in the discussion. If they are approved, it could take away from the Bitcoin ETFs' novelty. 

Conversely, others have noted that the buying activity is slowly chipping away at seller liquidity and that there are only 5,000 BTC between current prices and the $80,000 level on Coinbase. Others see this bull run as just the beginning of a broader bull market that could send the price of Bitcoin into the six-figure range. 

Either way, it is impossible to deny the popularity of the current Bitcoin ETFs and their impact on the market. It will be interesting to see how the dynamic changes in the coming months. 

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