Bitcoin remained bid on Thursday as demand for spot exchange-traded funds (ETFs) persisted.
The leading cryptocurrency was trading near $72,500 on Thursday, according to CoinDesk market data. U.S.-listed spot ETFs saw another $155 million in net inflows on Wednesday, continuing a recent surge of institutional buying that helped boost prices after weeks of subdued activity.
New inflows over the past two weeks have brought total allocations to about $1.47 billion, marking a sharp reversal from weeks of withdrawals earlier this year, according to data compiled by SoSoValue.
After a rocky start to the year, institutional demand through ETFs has begun to stabilize. Investors have poured about $1.7 billion into U.S. spot Bitcoin ETFs since February 24, according to Bloomberg Intelligence data previously reported by CoinDesk, suggesting some investors are increasingly comfortable that the market may have at least found a near-term bottom.
Earlier this week, Bitfinex analysts warned that ETF inflows do not always immediately translate into buying pressure in the spot market. Authorized participants can create and short ETF shares before purchasing the underlying Bitcoin, thus delaying the impact of these flows on price.
Still, some market participants say inflows into spot ETFs and Bitcoin’s recent rally amid geopolitical tensions point to the cryptocurrency’s growing macro correlation.
“Bitcoin is increasingly being repriced by the market as a geopolitical hedge rather than just a risk asset,” said Bitfire CEO Livio Weng. “Unlike gold, Bitcoin can be traded 24/7 and can move across borders instantly, making it a natural escape valve for capital in times of geopolitical stress.”
Be careful with on-chain data
Glassnode said that despite the rebound in traffic, underlying demand signals remain fragile. Buyer momentum has weakened significantly, with the 30-day moving average of realized profits down about 63% since early February, the company said in a recent report.
Bitcoin supply as a percentage of profits has also slipped to about 57%, a level historically associated with the early stages of deeper bear market conditions. Glassnode added that a short-term holder’s cost basis near $70,000 could serve as a key behavioral cap, potentially turning rallies into distribution territory as traders exit positions near breakeven.
