$65 Billion Poured into Bitcoin ETFs... Why is Institutional Capital Suddenly Wavering?

▲ Bitcoin (BTC) Exchange Traded Fund (ETF) ©CoinReaders

Although the Bitcoin spot ETF market has set a historic record with $65 billion in cumulative capital inflows, recent trends are signaling a 'moderation' in institutional capital. In particular, as the net inflow trend, which had continued for six consecutive weeks, suddenly reversed in mid-May, the market is once again focusing on "whether institutional buying can be sustained."

According to TradingNews, an investment media outlet, on May 22 (local time), BlackRock's iShares Bitcoin Trust (IBIT) traded at $43.41, down 1.35% from the previous day. The total assets under management (AUM) of the US Bitcoin spot ETF market have now exceeded $102 billion, with holdings totaling over 1.3 million BTC. Notably, the cumulative net inflow since its launch in January 2024 has surpassed $65 billion. The media outlet commented, "Bitcoin spot ETFs have surpassed the initial 15-year inflow volume of gold ETFs within two years of their launch."

Institutional capital continues to be concentrated in IBIT. IBIT absorbed approximately $8.4 billion, or about 45% of the total $18.7 billion in net inflows into Bitcoin spot ETFs during the first quarter of this year. Its assets under management are reportedly expanding to up to $67 billion. The media outlet explained that open interest in options reached 6.5 million contracts, which is approximately 61 times that of FBTC and about 150 times that of GBTC. Additionally, Morgan Stanley's Bitcoin spot ETF 'MSBT' is reportedly aiming to expand its market share with an ultra-low fee strategy of 0.14%.

The decisive period that boosted market sentiment was last April. US Bitcoin spot ETFs attracted approximately $2 billion in capital during that month, recording the strongest monthly inflow trend of the year. It was explained that the amount of ETF capital inflows continued to exceed new Bitcoin mining output, increasing expectations of a supply shortage. However, the trend changed rapidly from the week of May 15. The media diagnosed, "The net inflow trend, which had continued for six consecutive weeks, was broken, and questions about the sustainability of institutional demand resurfaced."

The macroeconomic environment was also cited as a reason for the slowdown in institutional capital inflows. The US Consumer Price Index (CPI) recorded 3.8% year-over-year, and since Kevin Warsh took office as Federal Reserve (Fed) Chairman, the market has placed more weight on the possibility of prolonged high interest rates rather than rate cuts. The US 10-year Treasury yield has risen to 4.584%, and the strong AI-driven US stock market and rising gold prices are also intensifying competition for institutional capital. In fact, Bitcoin (BTC) is currently trading at around $76,734, and whether it can defend the $75,000 support level has emerged as a key variable.

However, TradingNews assessed that the long-term structure itself remains positive. This is because, with the global ETF market size already expanded to $21.91 trillion, the proportion of Bitcoin spot ETFs is still only about 0.47%. Goldman Sachs holds over $1 billion through Bitcoin spot ETFs, and the US public pension fund CalPERS is also reported to have invested $500 million in the first quarter of this year. The media predicted, "The capital outflow in May is closer to a short-term adjustment than a structural collapse," and "If the weekly net inflow trend resumes, IBIT could continue its attempt to recover the $55 range."

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*