U.S. spot Bitcoin exchange-traded funds recorded a combined $517.19m in net inflows on Wednesday, their strongest daily performance since 4 May, as a broad recovery in cryptocurrency markets encouraged renewed institutional buying.
Data from SoSoValue showed that eight of the 12 Bitcoin ETFs attracted fresh money during the session. BlackRock’s IBIT led the way with inflows of $284.7m, followed by Ark & 21Shares’ ARKB with $77.7m and Fidelity’s FBTC with $62.4m.
The total was the largest inflow into the funds for three months and 16 days. Analysts said the move reflected a more positive market mood following signs of improving liquidity and regulatory developments in the United States.
Bitcoin rose above $69,000 on Tuesday for the first time in two months, while Ether recovered the $2,000 level. The wider rally was linked to an expansion of Treasury buyback operations and the latest cryptocurrency investment proposal from the Securities and Exchange Commission (SEC).
“We’re not surprised by the $517 million inflow into bitcoin ETFs on Wednesday – it’s a natural reaction to the Department of Treasury’s buyback announcement,” Jeff Mei, chief operating officer of BTSE, told The Block. “When the Treasury signals it’s stepping in to cap Treasury yields, the dollar softens, risk appetites return, and bitcoin and crypto benefit.”
The U.S. Treasury Department said on Wednesday morning that it would at least double the size of its liquidity-support buyback operations for longer-dated nominal coupon securities across the 10- to 30-year section of the market.
The SEC had proposed a rule on Tuesday creating two exemptions for certain crypto investment contracts. Under the proposal, issuers could raise up to $5m over four years or $75m annually, provided they met disclosure requirements.
Rachael Lucas, a crypto analyst at BTC Markets, said expectations of stronger liquidity had encouraged institutions to increase their exposure, rather than the gains being driven by “pure retail FOMO.”
“After the heavy outflows seen in May-June and more choppy flows through parts of July and mid-August, a print of this size signals that larger allocators are once again treating current levels as constructive entry points or adding on strength,” Lucas told The Block. “It is not opportunistic day-trading money; these are typically longer-horizon allocations from players who have the compliance frameworks and balance-sheet capacity to move size.”
Both Lucas and Mei cautioned that inflows were unlikely to remain at Wednesday’s level.
“A lot depends on whether the buybacks are a one-off move or an ongoing initiative This depends on inflation and how the U.S.-Iran conflict will evolve,” Mei said. “The catalysts we’re watching for are next week’s CPI data and any commentary from Bessent on whether this buyback strategy will be sustained over a longer period.”
The cryptocurrency rally continued on Thursday, with Bitcoin up 8.3% over the previous 24 hours at $69,564. Ether rose by almost 18% to $2,251, while XRP and Solana each gained about 10%.
Hyperliquid’s HYPE was among the day’s biggest risers after President Donald Trump publicly said Commodity Futures Trading Commission chair Michael Selig was working to bring the perpetuals-focused trading platform into the United States in a “fully compliant and legal fashion.”
LIT, the native token of competing perpetual futures platform Lighter, increased by 23.5% over the same period to $2.84. The overall cryptocurrency market was up 8%.
“Overall, Wednesday’s print is a constructive data point that institutional demand remains very much alive and capable of absorbing supply when the setup improves,” Lucas said.
The Block describes itself as an independent media outlet providing news, research and data. It said that, as of November 2023, Foresight Ventures was its majority investor. Foresight Ventures invests in other companies in the cryptocurrency sector, while crypto exchange Bitget is an anchor limited partner for the company. The Block said it continued to operate independently and provided financial disclosures.
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