In Summary
Bitcoin ETFs recorded $744 million in inflows after five weeks of outflows, indicating a return of institutional interest in BTC. March marked a reversal after experiencing $5.3 billion in outflows since February, with $274 million flowing in on Monday alone.
Despite the optimism, analysts warn that some ETF demand might stem from arbitrage strategies, not genuine long-term interest.
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After five consecutive weeks of withdrawals, US spot Bitcoin ETFs have rebounded with $744 million in net inflows this week. On Monday, March 17th, the ETFs recorded $274 million in inflows, the highest in over a month.
This recovery suggests that institutional investors are returning to the Bitcoin market as macroeconomic factors have been priced in. However, BTC has yet to surpass the $90,000 mark.
Bitcoin ETFs Start to Recover from $5 Billion Loss
US Bitcoin ETFs have lost over $5.3 billion since the second week of February. This month has been particularly challenging for the ETFs, with a record $3.5 billion in withdrawals.
The massive sell-off was attributed to institutional investors liquidating their holdings amid market volatility and changing macroeconomic conditions. However, March has signaled a reversal, with inflows steadily increasing over the past week.
With macroeconomic concerns easing, institutional investors appear to be regaining confidence in the market. The week started with a strong signal, as Bitcoin ETFs recorded $274 million in inflows on Monday
This positive momentum continued, culminating in six consecutive days of net inflows. On March 21st alone, the ETFs recorded a total net inflow of $83.09 million.
BlackRock’s IBIT led the way, recording up to $150 million in positive inflows on Friday. Meanwhile, all other issuers remained unchanged. The only exception was Grayscale’s GBTC, which continued its trend of withdrawals, losing $21.9 million that day
This shift suggests that institutional investors may be preparing for a potential market recovery. Crypto influencer and Open4Profit founder Zia ul Haque pointed to this resurgence, questioning whether institutional investors are acting on inside information.
“Institutions started accumulating again: Do they know something?! Bitcoin ETFs have had positive inflows for 5 consecutive days! This is the largest consecutive inflow this month. Since the beginning of March, the big boys have been selling BTC aggressively, creating huge panic and sharp price drops in the market. But for the last few days, they are accumulating again. This could be a good sign for the market,” ul Haque wrote.
His assessment aligns with the steady recovery in ETF inflows and Bitcoin’s price action, which continues to defend against further declines.
However, despite the positive ETF inflows, not everyone shares an optimistic view of Bitcoin’s price recovery. Some analysts suggest that Bitcoin ETF inflows do not clearly reflect renewed interest.
Institutional trading strategies may be undergoing a structural change. Hedge funds often utilize a low-risk arbitrage strategy involving spot Bitcoin ETFs and CME futures.
The demand for ETFs is real, but a portion of it is purely for arbitrage. There’s real demand to own BTC, just not as much as we’ve been led to believe. Until real buyers step in, this volatility will continue,” explained prominent analyst Kyle Chasse.
If this structural shift continues, it could affect market stability despite the recent return of ETF inflows
At the time of writing, Bitcoin is trading at around $84,148. It is down slightly by 0.46% in the last 24 hours, failing to reflect the optimism amid the recent surge in Bitcoin ETF investments.
Meanwhile, Ethereum ETFs continue to record negative flows, with net outflows for 12 consecutive trading days (over two weeks).
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