Is Bitcoin Preparing for a Massive Price Explosion? One of the Biggest Bitcoin ETFs Sees Largest Inflow in Over a Year

The sudden surge of Bitcoin ETF applications in the United States has immediately piqued the attention of institutional investors. According to Bloomberg’s senior ETF analyst, Eric Balchunas, ProShares’ Bitcoin Strategy ETF (BITO), a Bitcoin futures fund available in the U.S., recently experienced its highest weekly influx in over a year.

The Bitcoin Futures ETF $BITO had its biggest weekly inflow in a year as assets top $1b again. It also traded half a billion in shares on Friday, which it’s only done about 5 times before via @SirYappityyapp pic.twitter.com/Xrq0lUaaTO

— Eric Balchunas (@EricBalchunas) June 25, 2023

ProShares reports an impressive growth of 59.6% in the BITO fund since the start of 2023. This influx coincided with Bitcoin (BTC) prices surpassing the $30,000 mark, and it also aligns with a wider upsurge of fascination in Bitcoin derivatives ed by BlackRock’s recent submission for its own Bitcoin ETF.

In a remarkable development, an impressive sum of $65.3 million flowed into BITO. Consequently, the total assets under management for BITO have exceeded $1 billion, marking a significant milestone highlighting the rising appeal of Bitcoin-related ETFs among institutional investors.

BITO’s triumph can be partly credited to its exceptional ability to mirror Bitcoin’s fluctuations closely. Balchunas emphasizes that BITO only deviates from spot prices by a minimal 1.05% annually, making it an appealing choice for investors who desire exposure to digital currency. Moreover, with a low fee of 0.95%, the fund allures institutional investors to contemplate including it in their investment portfolios seriously.

Surging Open Interest in Bitcoin Futures Signals Investor Engagement

Open interest (OI) is a metric that quantifies the number of futures contracts yet to be settled. With the recent upswing in ETF trading and the consequent rise in BTC prices, Grayscale, the largest crypto asset manager globally, has experienced a favorable impact. The Grayscale Bitcoin Trust (GBTC), which previously faced a substantial discount compared to spot BTC prices, is progressing as the discount gradually diminishes.

According to Coinglass, the current premium or discount for Grayscale stands at -31.2%, a significant improvement from the low point of -49% witnessed in December. While the Securities and Exchange Commission (SEC) approval of a spot Bitcoin ETF remains uncertain, several new applications have surfaced subsequent to BlackRock’s filing. Moreover, this resurgence in applications indicates a dynamic landscape of possibilities.

BTC futures OI over the past month. Source: Deribit

Signs of this escalating enthusiasm are apparent in the data provided by the Deribit crypto options exchange, which demonstrates a substantial uptick in the open interest (OI) of Bitcoin futures compared to the previous week. As of June 25, the OI reached $319 million, showcasing a noteworthy growth of approximately 30%.

The surge in open interest for Bitcoin futures and the increasing popularity of Bitcoin-linked ETFs reflects a renewed enthusiasm among institutional investors for cryptocurrencies. Moreover, these investors, often representing large financial institutions and corporations, are now recognizing the potential of digital assets as a viable investment avenue. Furthermore, the recent interest from institutions such as BlackRock, one of the world’s largest asset managers, underscores a growing acceptance of cryptocurrencies within the mainstream financial sector.

While this rekindled excitement brings promising possibilities, it is essential to approach cryptocurrency investments with prudence, considering the market’s inherent volatility and unpredictability.