The green light given to Bitcoin exchange-traded funds (ETFs) in the United States has brought legitimacy to the cryptocurrency industry in the eyes of investors. The approval of the first U.S.-based spot Bitcoin ETFs in January has resulted in the introduction of regulated and publicly traded investment vehicles based on Bitcoin (BTC). This development has also led to a significant change in investor mindset, as stated by Sheraz Ahmed, the managing partner of Storm Partners. According to data from Dune, the U.S. spot Bitcoin ETFs have accumulated a total of $57.7 billion worth of Bitcoin in onchain holdings.
The launch of Bitcoin ETFs has played a major role in legitimizing the crypto industry, particularly among mainstream investors. However, it is not just the availability of publicly traded products that is boosting investor confidence, but also the regulatory approval that underlies them, as explained by Ahmed.
In terms of flows, the U.S. Bitcoin ETFs experienced a streak of 20 consecutive days of net positive inflows, which was broken on June 10. Since then, there have been four consecutive days of net outflows, with a total of $152.4 million in cumulative net outflows on June 18, according to data from Farside Investors. This coincided with a decline in the price of Bitcoin, which dropped from above $70,000 on June 7 to a one-month low of $64,032 on June 18, finding support at that level, according to Bitstamp data.
The inflows into ETFs played a significant role in the price rally of Bitcoin in 2024. By February 15, Bitcoin ETFs accounted for approximately 75% of new investments in the world’s largest cryptocurrency as it surpassed the $50,000 mark.
In conclusion, the approval of Bitcoin ETFs in the United States has brought credibility to the cryptocurrency industry and has had a profound impact on investor sentiment. The regulatory backing behind these ETFs has provided investors with a sense of security. Despite recent outflows and a temporary decline in Bitcoin’s price, the inflows into ETFs have played a crucial role in driving the overall growth of the cryptocurrency.