Weekly Inflows into Bitcoin ETFs Reach Highest Level Since March

Spot bitcoin ETFs experienced their most substantial weekly inflows in two months, buoyed by last week's consumer price index report, which appeared to alleviate some prevailing concerns about the asset.

According to data from Farside Investors, the US fund category collectively recorded $948 million in positive net flows from May 13 to May 17. This marked the highest weekly total since the segment saw over $2.5 billion in inflows from March 11 to March 15.

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CPI and Bitcoin Growth

Analysts linked the decreased demand in April primarily to profit-taking and expectations of the Federal Reserve maintaining higher interest rates for an extended period.

However, according to analysts at Ryze Labs, the consumer price index (CPI) for April, reported on Wednesday, showed a cooler-than-expected increase of 0.3% month-on-month. This was lower than the market's anticipated 0.4%, dampening rate hike speculations. "This has quelled rumours of a potential rate hike and sets the stage for [Fed Chair Jerome] Powell to potentially consider a rate cut in the upcoming months," the analysts noted.

Rate expectations have recently been a significant factor impacting Bitcoin's price. The cost of one Bitcoin fell to around $57,000 on May 1, following a new all-time high of over $73,000 reached in mid-March.

James Butterfill, head of research at CoinShares, observed that the vast majority of the inflows (more than 80%) occurred in the final three days of the week following the CPI announcement. This underscores the firm's viewpoint that Bitcoin prices are now closely aligned with interest rate expectations, as detailed in his report on Monday.

Inflow-Outflow

The $948 million net inflows into spot bitcoin ETFs almost matched the net funds exiting the category over the previous five weeks. According to data from Farside Investors, the category experienced net outflows of $931 million from April 8 to May 10.

Notably, the Grayscale Bitcoin Trust ETF (GBTC) recorded its first week of net inflows—albeit marginally—for the first time in this period. This fund’s $17.6 billion in net outflows over the past four-plus months have significantly impacted the segment, which has now reached approximately $12.6 billion in combined positive net flows.

The influx of funds coincided with a week when more institutional investors disclosed their holdings in such funds, as required quarterly by the Securities and Exchange Commission in what is known as 13F filings.

Recent disclosures have revealed significant investments, such as Wisconsin’s Investment Board purchasing 2.4 million shares of BlackRock’s iShares Bitcoin Trust (IBIT) and over a million shares of GBTC. Additionally, the hedge fund Millennium Management reported owning about 20 million IBIT shares, valued at over $844 million. The 13F filings indicated that more than 400 institutional investors now hold IBIT.

Nathan McCauley, CEO of Anchorage Digital, remarked on the disclosures, noting the institutional engagement that bitcoin ETFs were designed to foster. “From hedge funds and endowments to governments and pension funds, traditional players are funneling hundreds of millions of dollars into ETF inflows,” McCauley stated. “As bitcoin liquidity continues to grow, we can expect an increasing number of institutions to engage with crypto via safe and secure infrastructure.”