Bitwise: Bitcoin ETF Inflows Could Break Records

Crypto asset manager Bitwise predicts that the expected fund inflows for spot Bitcoin Exchange-Traded Funds (ETFs) in the U.S. during the last quarter of the year could surpass the total inflows projected for 2024. Given annual analyses and the current market situation, a strong increase in demand for Bitcoin is anticipated.

Bitwise’s Chief Investment Officer Matt Hougan stated in a note to investors, "It’s very likely we will break a new record by the end of the year." Three key factors support this optimistic forecast: the approval processes of asset managers, the rise in Bitcoin prices, and the strengthening narrative of protection against value erosion.

Large financial institutions, such as Morgan Stanley and Wells Fargo, have begun to allocate limited space for Bitcoin ETFs in their portfolios. Morgan Stanley’s portfolio strategy recommendation is developing towards suggesting a Bitcoin ETF allocation of between 0% to 4% depending on risk tolerance. This indicates a rapid increase in institutional acceptance. Similarly, other major financial institutions like Wells Fargo, UBS, and Merrill Lynch have started to offer Bitcoin ETF investments to their advisors.

Bitwise anticipates that this situation could increase the preference for strong assets like Bitcoin and gold during year-end portfolio adjustments. Given that Bitcoin reached an all-time high by surpassing $125,000 at the beginning of October, the motivations behind this forecast become clearer. Bitwise also notes that historical data suggests that double-digit price increases have consistently coincided with "double-digit billion-dollar" increases in ETF inflows.

Matt Hougan mentioned, "In the first four days of the quarter, there have already been $3.5 billion in inflows. I expect another $10 billion will come by year-end." On Tuesday, total inflows into Bitcoin ETFs reached $875.6 million. Of this amount, $899.4 million came from BlackRock’s IBIT fund. Additionally, the day before, the largest daily inflow of $1.21 billion was recorded following the election victory of Donald Trump.