Exchange-traded funds are a basket of currencies bought into by investors. Products dealing specifically in the cryptocurrency Bitcoin have recorded record inflows in the past week. We discuss this in the article below.
Bitcoin exchange-traded funds have continued on a positive run, recording record inflows. This has taken place not just in the last seven days, but over a period of weeks. All of this has been against a backdrop where gold, traditionally seen as a safe haven in times of economic uncertainty, has seen its ETF products hemorrhage outflows.
US Bitcoin ETF Products
Last week, Bitcoin ETFs based in the United States saw around $1.8 billion in inflows. This has seen them on a positive run that began on April 17th. The last Thursday in May saw them record $423 million in inflows, while the second saw them reach $675 million. They also beat the Ethereum ETF ones by 10:1.
Renewed confidence saw the currency climb to around $94,000, its highest in weeks. It then continued on an upward trend to scrape the $97,000 barrier late on Friday. At the time of writing, the Bitcoin price live has reversed and stabilised back around the $94,000 mark. Further inflows over the next few days could push this past the psychological barrier and back up to previous heights, or even further.
Year-to-date totals are now approximately $5.6 billion for all digital asset products. This has been a huge reversal in a trend that has seen the year not just volatile for crypto, but one that has tended to have stagnant, if bearish sentiment. Assets under management also went from $151 billion to $156 billion. This shows an increasing demand for products related to cryptocurrencies.
Much of this growth and subsequent volatility, has been due to economic uncertainty. A more crypto-friendly regime in the United States saw a boom in interest, with Bitcoin prices reaching an all-time high of $108,786. Primarily, this was down to the possibility of a strategic reserve in the United States.
However, this quickly turned more bearish as tariffs unsettled investors. Now, it seems the tide has turned, and many are using cryptocurrency as a way to hedge against this economic uncertainty. However, not all ETF products related to Bitcoin had a great week. While some were recording inflows of $2.56 billion, Ark 21Shares Bitcoin ETF saw a shrinkage of $458 million.
A Drop in Gold ETF Interest
In contrast, Gold ETF products have seen massive outflows. Around $1,941 billion was recorded in the last week of April and into early May. The week before, a $4 billion gap was recorded between Bitcoin and Gold ETF flows. It is believed athat large proportion of these flows are from institutions and advisory firms.
One argument is that this may lie in the fact that Bitcoin does not rely on the economic outlook or worries of a certain country or block monetary risks for its value. This means that many people see it as a hedge.
The counterargument to this is that there have been many times when Bitcoin has followed the price of the USD pretty closely. Its volatility over the period of tariffs has also impacted its price, preventing major growth until recently.
Performance of Altcoin ETFs
There are also possible ETFs coming late in the year for other Altcoins. This may include XRP and Dogecoin. While motions have been filed to introduce them, this will all depend on possible consumer sentiment. If Ethereum is anything to go by, this does not look good.
Last week, Ethereum ETFs did manage to attract $149.2 million in inflows. This brings the total to $336 million over a two-week period and $551 million for the year to date. However, this is quite a small amount in comparison to Bitcoin. This also shows Bitcoin asserting its domain over the rest of the crypto market, often at their expense.
Other investment-based products that use altcoins had modest gains. XRP has had a fantastic year in crypto. It managed to accrue $256 million this year and $10.5 million in the same period. Solana has managed to record $6 million, and Tezos has $8.2 million.
Strategy Continues Bitcoin Journey Despite Losses
One company that has placed its eggs firmly in the nest of Bitcoin is Strategy, formerly MicroStrategy. In March, it registered historic losses on top of a $4.2 billion shortfall in the quarter. This was attributed to a change in accounting, which valued its bitcoin holdings at current market values.
However, it is now poised to double its capital raising goal to buy Bitcoin to $84 billion. It will do this through the sale of $21 billion worth of common shares. This is a huge expansion of its debt purchase program.
The company currently holds 555,450 BTC. This is around $53 billion at today’s market value. CEO Saylor has turned his software company into a Bitcoin stalwart, and this has helped push confidence in the product greatly. In the last quarter, the revenue from the software arm of the company had declined by 3.6% while Bitcoin acquisition, assets, and investments rose.
All of this signifies continued trust in the traditional financial sector. It now seems that volatility is the nature of Bitcoin, and it is unlikely that it will ever change. Yet what this does show is a possible long-term acceptance, which can only mean a continued, sustained climb higher in price.