Bitcoin ETFs post $2.8 billion in inflows over 6 days as investors return

Bitcoin exchange-traded funds (ETFs) have experienced significant inflows, drawing nearly $3 billion from investors over the past six trading days. The surge has occurred amid renewed optimism in the cryptocurrency sector and marks the strongest streak of interest since earlier this year.

Major asset managers see record activity

Leading financial institutions, including BlackRock, Fidelity, and Morgan Stanley, actively manage these Bitcoin ETFs. Data compiled by Farside Investors indicate that, since September 17, the funds have attracted $2.8 billion in new capital.

Trading on Monday alone accounted for nearly $1 billion in ETF share purchases, representing the largest single-day inflow since October 6, when over $1.2 billion entered the market and Bitcoin’s price climbed to its all-time high of $126,080.

Despite the recent flurry of investment, Bitcoin’s price has reacted more moderately. By Friday, the cryptocurrency traded just under $83,975, up from a weekly low but still below Monday’s high of $87,330. Over the last week, Bitcoin’s value increased by approximately 4%.

Investor returns improve as ETF cost basis rises

Bloomberg ETF analyst James Seyffart noted that, for the first time since January, most ETF holders are now in profit. This development follows an increase in the estimated ETF cost basis, now at $81,722 per Bitcoin.

Most Bitcoin ETF investors are seeing gains as the cost basis surpasses $81,722 per coin, marking the first time the average holder is back in profit since January.

The strong inflows coincide with increased investor confidence following policy signals from the U.S. Department of the Treasury in August. The department announced it would at least double the amount of liquidity-support buyback operations, easing conditions in financial markets.

The Treasury’s move led to a decline in 30-year U.S. bond yields and a weaker dollar, both seen as supportive for Bitcoin’s price. However, Treasury yields have since risen again, tempering some of the initial momentum.

Market outlook and the “debasement trade”

Bitcoin’s strong performance came despite a backdrop of political and regulatory headwinds. Last week, lawmakers blocked the Clarity Act, a bill aimed at clarifying crypto regulations, and the Federal Reserve raised interest rates. Still, Bitcoin continued to gain ground.

CryptoQuant, a prominent cryptocurrency market analytics firm, observed this week that Bitcoin rose above its 365-day moving average—a metric often used to identify longer-term market trends. Analysts from the company suggested this was a sign that the asset had exited its recent bear market.

The current rally has revived discussions around the so-called “debasement trade.” This strategy involves investors moving capital into assets like Bitcoin to hedge against the risk of currency depreciation.

In October last year, Bitcoin touched a record high of $126,080 before declining sharply, following a major liquidation event that resulted in the closure of $19 billion in leveraged positions. With the dollar weakening once again, Bitcoin appears to be benefiting from investors seeking alternatives to traditional fiat currencies.

Mini dictionary: Debasement trade, a financial strategy where investors allocate funds to assets such as gold or Bitcoin as a hedge against the declining value of a currency, especially in environments where inflation or monetary policy weaken the currency’s purchasing power.