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Bitcoin ETFs See Record $1.05 Billion Inflow Amid Surging Demand

Bitcoin spot Exchange-Traded Funds (ETFs) experienced an unprecedented total net inflow of $1.05 billion on March 12, marking the highest single-day influx since the inception of the ETFs. This surge represents a substantial increase of approximately 56% compared to the $673 million recorded on Feb. 28. Notably, the significant inflow into Bitcoin ETFs can be attributed to their consistent performance, surpassing the newly mined supply of Bitcoin.

Clive Thompson, a former managing director of wealth management with expertise in Swiss Private Banking, pointed out in a LinkedIn post that on March 11 alone, new Bitcoin ETFs acquired approximately 7200 Bitcoins. This starkly contrasts with the average daily mined supply of 900 Bitcoins. Thompson emphasized that this imbalance between demand and new supply led to a 5% increase in Bitcoin prices.

Thompson also highlighted the impact of Genesis Holdings’ market dynamics. Following its bankruptcy, Genesis Holdings commenced liquidating its GBTC shares, indirectly affecting Bitcoin sales. These sales, initiated on Feb. 28, seemed to conclude around March 13, according to Thompson. He suggested that the completion of Genesis’s GBTC share sales could significantly influence Bitcoin’s price trajectory, potentially leading to a surge to new highs and prompting further inflows into Bitcoin ETFs.

Eric Balchunas, a senior ETF analyst, shed light on the remarkable trading volumes within the Bitcoin ETF market. On March 12, the market witnessed its second-highest trading volume day for the ten spot Bitcoin ETFs, with a total volume of $8.5 billion, marking the best day in the past five weeks. Notably, BlackRock’s spot Bitcoin ETF, IBIT, saw exceptional activity, doubling the trading volume of SPDR Gold Shares ETF (GLD). Additionally, other ETFs such as VanEck’s HODL and Invesco Galaxy’s BTCO experienced substantial trading volumes of $150 million and $250 million, respectively.

The success of IBIT has spurred further interest in Bitcoin ETFs, prompting BlackRock, under Larry Fink’s leadership, to seek regulatory approval for expanding its cryptocurrency offerings. This includes proposals for additional spot Bitcoin ETFs and inclusion in its Global Allocation Fund, along with efforts to extend its reach to emerging markets in Latin America through the launch of the iShares Bitcoin Trust ETF’s Depositary Receipts in Brazil.

However, the journey for new cryptocurrency ETFs, including those for Ethereum (ETH), faces regulatory hurdles. The SEC’s reluctance to approve or deny these filings until May has raised speculation among experts regarding the likelihood of approval. The absence of dialogue between the SEC and ETF issuers like BlackRock has contributed to this uncertainty. Nevertheless, there is anticipation for upcoming meetings that could potentially influence the SEC’s stance on these innovative financial products.

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