Bitcoin doesn’t let us forget about it. Record inflows to ETF funds based on this cryptocurrency signify not only a turn towards its adoption by the mainstream of the financial market but also an increase in investors’ trust in this somewhat new asset class. At times when the digital currency breaks through price barriers, it’s worth examining what lies behind this phenomenon.
In the last week, investment funds focused on Bitcoin, managed by industry giants such as BlackRock, Bitwise, Fidelity, Grayscale, ProShares, and 21Shares, recorded unprecedented inflows, reaching almost $2.5 billion globally. This phenomenon not only restored the value of managed assets (AUM) to levels observed in December 2021 but also marked a growing interest in a new investment instrument, namely ETF funds based on American spot exchanges for Bitcoin.
This coincided with an impressive increase in the price of Bitcoin, which has grown by about 25% since the beginning of the year. This growth, combined with record inflows, caused the value of managed assets of these investment firms to reach $67 billion, the highest level since the peak of the last bull market in December 2021.
The dominance of the United States in this sphere is indisputable – the country accounts for 99% of weekly inflows. Despite this concentration, funds based in Switzerland and Germany also recorded modest inflows. Meanwhile, Sweden experienced significant outflows, highlighting regional differences in investor sentiment towards crypto funds.
Investment products based on Bitcoin remain the main target for investors, capturing 99% of inflows. However, it’s worth paying attention to the activity in funds based on other cryptocurrencies. Ether leads among altcoins with inflows of $21.1 million, while funds such as Avalanche, Chainlink, and Polygon also recorded steady growth. On the other hand, Solana funds experienced outflows, likely due to the recent network downtime.
The current month has been particularly favorable for the leading cryptocurrency in the world, which has recorded an impressive increase of 27% in the last 30 days. Moreover, Bitcoin recently achieved a breakthrough, breaking above the key psychological threshold of $50,000, paving the way to explore new price territories and fueling speculation about the possibility of exceeding its all-time high within the year.
From a technical point of view, Bitcoin’s price consistently stays above the 0.5 level on the Fibonacci retracement chart, which is a strong signal of its durability. This stability suggests that the price will likely stay above the $50,000 threshold. Additionally, Bollinger Bands are starting to contract, which may indicate price stabilization in the short term.
The Directional Movement Index (DMI) reveals that buying power has dominated the Bitcoin market in recent days. However, the positive directional indicator (+DI) at 20.11 seems to be at risk of declining compared to the Average Directional Index (ADX) at 17.04 and the negative directional indicator (-DI) at 14.47.
Inflows to Bitcoin ETF funds and its price momentum currently go hand in hand. This direct relationship may drive the price of Bitcoin to unprecedented levels, especially with the anticipation of increased inflows in the near future.
Photo by DrawKit Illustrations on Unsplash
