Institutions Bought First Before Bitcoin Broke $80,000…What Does BlackRock IBIT's Fund Reversal Mean?

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Just before Bitcoin (BTC) broke past $80,000, the fund flow for US spot Bitcoin ETFs turned to net inflows, signaling a recovery in institutional demand. Notably, IBIT, the largest product in the market, recorded a fund flow reversal of $327.66 million in a single day. However, as the overall weekly flow is still a net outflow of $426.5 million, further confirmation is needed to determine if institutional buying has truly picked up.

According to the investment media outlet TradingNews on September 18 (local time), the 11 US spot Bitcoin ETF products recorded a net inflow of $159.45 million on September 17, breaking away from two consecutive trading days of large-scale fund outflows. IBIT saw an inflow of $183.66 million, exceeding the total net inflow, while FBTC saw an outflow of $16.64 million and HODL saw an outflow of $7.57 million. In particular, IBIT reversed from a net outflow of $144 million the previous day to a net inflow of $183.66 million in one day, showing a 24-hour change of $327.66 million.

The preceding fund outflows were significant. On September 15, when the US crypto market structure bill, the Clarity Act, failed to secure the 60 votes needed for passage in a Senate procedural vote (49 in favor, 50 against), $450 million flowed out of spot Bitcoin ETFs. On the 16th, when the Federal Reserve (Fed) raised the benchmark interest rate by 25 basis points to 3.75-4.00%, another $296 million was net outflowed. Funds withdrawn over these two trading days totaled $746 million. Although 21% of this was recovered with the net inflow on the 17th, the cumulative weekly flow until Thursday recorded a net outflow of $426.5 million.

IBIT's influence is growing. As of mid-September, IBIT's net assets were $62.22 billion, accounting for 62% of the total spot Bitcoin ETF net assets of $100.09 billion. The total net assets of US spot Bitcoin ETFs represent 6.3% of Bitcoin's market capitalization. Over the past 30 days, spot ETFs saw a net inflow of $3.53 billion, and inflows for three weeks from late August to early September amounted to approximately $3.8 billion. However, as the fund inflow on the 17th was virtually concentrated in IBIT alone, the key to recovering institutional demand was considered to be whether buying spreads to multiple ETFs.

The reversal in ETF fund flows occurred just before Bitcoin broke past $80,000. On the 18th, with the opening of the US stock market, Bitcoin surpassed $80,000, rising to $80,858.25, up 5.42% in a day, and rebounding 6.4% from its weekly low of $75,972. In the derivatives market, a total of $345 million in cryptocurrency positions were liquidated over the preceding 24 hours, with short position liquidations amounting to $208 million. TradingNews analyzed that since a short squeeze (buying pressure resulting from the liquidation or covering of short positions) played a significant role in the price increase, subsequent fund inflows into spot Bitcoin ETFs are a critical indicator of institutional demand to support the $80,000 breakout.

The future turning point depends on the size of IBIT's fund inflows and whether Bitcoin can maintain support at $80,000. The media suggested that if IBIT continues to see net inflows of over $300-400 million per day, it could signal a recovery in the institutional buying pace that led the August rally. Conversely, if consecutive net outflows of over $250 million per day occur, it could indicate that this fund flow reversal was temporary. If Bitcoin's price also holds $80,000 and rises to its monthly high of $82,178 and then $85,000, it could attract additional ETF funds, and if institutional demand continues, $90,000 is cited as the next target.

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