The Canadian Bitcoin ETF has reached the third-largest daily inflow since its inception with over 1,000 BTC of inflows earlier this week.
Purpose Bitcoin ETF, a Canadian-based exchange-traded fund, attracted over 1,000 BTC worth roughly $38 million on Tuesday, February 1. This is the fund’s third-biggest inflow ever.
According to Glassnode data, investors contributed around 1,054 BTC to the fund. This number was nearly on par with the inflows recorded on December 6, 2021. The largest number of inflows is still registered on the day Purpose Bitcoin ETF debuted – February 22, 2021, when 2,250 BTC entered the fund.
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Bitcoin ETFs appear to mirror the spot price performance of the digital currency proper. This helps investors gain exposure in the market without directly purchasing actual Bitcoin and dealing with the complexities of trading. In layman’s terms, if you invest in an ETF, you own Bitcoin by proxy, while the ETF-backers buy the actual BTC with the money you provided instead.
Theoretically, the price of BTC ought to move parallel to the flow of the funds, going upside. Markets tend to believe that consistent and strong inflows into the funds boost the prices of the assets and capture the attention of even more investors, ultimately leading to said parallel movement of both the fund and the asset.
While the flows were impacted by the sudden drop in the BTC price a couple of weeks ago, market data shows that ETF investors have been buying the dip. As reported by BitDegree last week, Bitcoin had dipped below $33,000. At the time of writing, on February 3, BTC is trading at around $36,000. The record trade of $69,000 was reached in November 2021.
In the three months since, the Purpose Bitcoin ETF grew from about 24,000 BTC to just over 31,000.
CoinShares published the Digital Asset Fund Flows Weekly Report on Monday, January 31, revealing that the BTC funds received a weekly inflow of cryptocurrency valued at $22 million. The total year-to-date outflows were recorded at $132 million worth of BTC.
According to James Butterfill, who authored the report, the trends show that investors may be “taking advantage of price weakness to add to positions.”
It was the second week in a row that Bitcoin saw inflows into the funds, after a five-week streak of outflows, as recorded by BitDegree last week. While last week total assets under management (AuM) fell to their lowest point since July 2021, reaching $29 billion, they have since recovered and bounced back to $31 billion.
<...> [W]hile small, it continues to suggest investors are beginning to cautiously add to positions at these depressed price levels.We are seeing an increasing price sensitivity to monetary policy statements, with the recent FOMC meeting having an immediate intraday price response.
According to an analysis by Bloomberg Intelligence Senior ETF Analysts Eric Balchunas and Athanasios Psarofagis, Bitcoin ETF trends appear to point towards continuous inflows. According to Balchunas and Psarofagis, “investors wait for the SEC to follow other countries and approve a spot Bitcoin ETF in the U.S.”
