Inflows into Bitcoin ETFs reached a 10-month high amid the crypto rally. What's next?

Bitcoin-based exchange-traded funds (ETFs) recorded their highest weekly capital inflows in 10 months last week amid a sharp rise in the cryptocurrency, Bloomberg notes. Bitcoin itself jumped by about 23% during that time, marking its strongest weekly gain in more than three years. On August 24, the cryptocurrency was trading around $77,780.

Thirteen U.S. spot Bitcoin ETFs attracted a total of $1.92 billion last week—a record high since last October, when Bitcoin reached its all-time high above $126,000, according to Bloomberg. The industry leader—BlackRock’s iShares Bitcoin Trust—accounted for $1.3 billion of the total funds raised last week, the agency notes. In addition, on August 20, Bitcoin-focused funds recorded their largest daily inflow in more than three months, attracting $606.3 million that day.

Capital inflows are occurring amid Bitcoin’s rise. Over the past week, the cryptocurrency has risen by nearly 23%, marking its strongest weekly gain in more than three years. It is noteworthy that just a week earlier, these same spot funds saw a net capital outflow of nearly $390 million—the largest in the past six weeks, the agency points out. Since the beginning of the year, a total of about $2.9 billion has been withdrawn from Bitcoin ETFs.

Despite last week's rally, Bitcoin is still trading about 40% below its October high.

The Bitcoin rally began amid U.S. plans to increase purchases of long-term government bonds to lower their yields, and the move gained additional momentum from a forced liquidation of short positions (a short squeeze). At the same time, the surge in capital inflows into ETFs indicates broad investor interest in cryptocurrency, Bloomberg explains.

The political backdrop also played a role: U.S. President Donald Trump once again called on Congress to pass the Clarity Act, a cryptocurrency bill, reaffirming the administration’s stance, which has actively supported digital assets throughout the current term.

“We saw a net inflow of capital on every trading day last week, which indicates a resurgence of investor interest in Bitcoin. The question now is whether this momentum will continue. After such a strong move by Bitcoin, some profit-taking would not come as a surprise,” said Gracie Lin, CEO of the OKX cryptocurrency exchange.

"In the short term, the market appears overheated but continues to receive strong support. After such a rapid move, some consolidation or pullback would not be a surprise, but it is difficult to predict when or how deep they will be as long as demand remains high,” said Jake Kindred, senior sales trader at market maker QCP Group.

“It’s very encouraging to see signs of life in the crypto market. And this rally feels different from those fleeting sparks we’ve seen over the past few months,” noted Noel Acheson, author of the “Crypto Is Macro Now” newsletter.

The current Bitcoin rally could become self-sustaining, according to Jeffrey Kendrick of Standard Chartered, the news agency reports. Bitcoin’s rising price could attract new capital inflows—and ultimately bring leveraged traders back to the market, he says: “For the first time this year, my year-end forecast of $100,000 [per Bitcoin] may turn out to be too low,” Kendrick noted. “Investors should remember how rapidly the asset is rising in price, and once we pass October 6—one year after the peak—Bitcoin is quite capable of reaching a new all-time high of $126,000 by the end of December,” the expert believes.

This article was AI-translated and verified by a human editor