Bitcoin ETFs See $250 Million Increase Amid Anticipated Rate Cut
Bitcoin exchange-traded funds (ETFs) are experiencing a renewed wave of interest, with data from blockchain analytics firm Arkham Intelligence indicating that American funds collectively acquired around $250 million worth of Bitcoin in a single day, marking the highest daily addition in over a month.
Subsequently, the price of Bitcoin surged above $61,000 per coin on Tuesday, reaching its peak for the first time in September.
The sudden surge in demand can be attributed to the basic functionality of ETFs, which are essentially funds that hold assets like Bitcoin and offer investors exposure through shares traded on traditional stock exchanges. When these new funds receive Bitcoin, it reflects investor interest as individuals or entities purchase shares tracking the asset’s price, prompting fund operators to make corresponding purchases on behalf of investors.
Major asset management firms such as BlackRock, Fidelity, and Grayscale introduced these products in January after securing approval from the U.S. Securities and Exchange Commission (SEC).
Following a period of initial popularity earlier this year, during which billions of dollars flowed into these products, demand waned in recent months due in part to concerns surrounding potential interest rate cuts by the Federal Reserve.
With markets anticipating a rate cut announcement from the central bank, some analysts suggest that a substantial 50-basis point cut may be more likely than a smaller 25-basis point reduction. This speculation has led to increased risk appetite among investors, contributing to the recent uptick in Bitcoin ETF inflows.
Data from CoinShares released on Monday revealed that crypto investment funds received $436 million last week, with a significant portion allocated to Bitcoin ETFs. This influx followed a period during which investors withdrew a substantial $1.2 billion from Bitcoin funds.
As anticipation builds around the expected rate cut announcement, the question remains whether Bitcoin will receive another boost up the price ladder.
