A BlackRock
exchange-traded fund (ETF) investing in Bitcoin (BTC) saw record inflows of
$520 million on Wednesday, marking the largest daily intake for any US ETF
across asset classes so far this year.
All this
comes as the price of Bitcoin tests $64,000 and is just a step away from its
historical highs of 2021. The market is currently dominated by speculative
frenzy, and “greed” is at a level never seen before.
The
BlackRock iShares Bitcoin Trust (IBIT) has seen steady investor demand,
registering 32 consecutive days of inflows. As of Wednesday, nine Bitcoin spot
ETFs combined saw trading volume over $2.6 billion, with IBIT breaking its own
record at $1.5 billion.
Source: Bloomberg
The surge
of investments into Bitcoin ETFs comes amidst a broader rally in cryptocurrency
prices. Bitcoin hit a two-year high on Wednesday, nearing its all-time record,
while other major digital assets like Ethereum also saw significant gains.
Analysts
say the successful launch of Bitcoin spot ETFs in January 2024 has opened the
door to fresh investments from wealth managers, hedge funds, and retail
traders. The ease of trading Bitcoin via ETFs is helping drive its price higher
by boosting demand.
Bitcoin price. Source: CoinMarketCap
“The market is waking up to the fact that
Bitcoin is now easily accessible to the masses and that we are only just
scratching the surface as far as mainstream adoption goes,” said Joel
Kruger, the Market Strategist at LMAX Group. “We also believe there has
been plenty of excitement around lower correlations with US equities, which
makes Bitcoin all the more attractive as an investment for portfolio
diversification.”
Everyone is excited about #Bitcoin possibly reaching $100k.
Some people say they won’t sell their Bitcoin when it hits that price,
but in reality, many probably will.
Reaching $100k is a big deal for Bitcoin,
Those who sell at $100k might regret it,
They will FOMO… pic.twitter.com/ZrHChNxBTi
— MDB (@MDBitcoin) February 29, 2024
Clearly, the demand for leverage in the cryptocurrency market is influencing investors’ behavior. Higher costs in the futures market and decentralized finance are leading to an increased need for crypto borrowing.
“Investors are increasingly seeking avenues to obtain liquidity in a high-rate environment, prompting them to turn to lending platforms that offer lending and futures services within an easily navigable interface,” commented Andrey Stoychev, the Project Manager at Nexo. “The demand for…
