- Bitcoin ETFs in the US wrap up a strong Friday session with $310 million in net new money
- Institutional investors went shopping for discounted Bitcoin tokens
- Recent developments have favored Bitcoin, with prices rising 10% over the weekend
Spot BTC ETFs Log $310 Million of Net New Money
The Bitcoin exchange-traded funds in the US logged a strong Friday with robust trading performance. Amid falling prices with BTC changing hands at around $56,000, institutional investors scooped up the discounted digital assets, resulting in $310 million in net new money flowing into the 11 spot Bitcoin ETFs.
Because these ETFs hold genuine Bitcoin, every penny spent on the token goes directly to its market capitalization, helping buoy valuations of the original cryptocurrency and the broader crypto markets in general. The recent positive inflow, factoring in the outflows, indicated that while prices are retreating and moving lower across the board, money managers are looking to snap up more of the coin and stack it for liquidity purposes.
How Does a BTC ETF Ensure Liquidity?
The more coins an exchange-traded fund has, its liquidity will improve. How does that work? Bitcoin is a volatile asset, and its price tends to fluctuate wildly day in and day out. With that, some market participants may be tempted to withdraw their BTC holdings in the case of a more extreme slide in the price.
On the other end is the Bitcoin ETF, which is responsible for meeting that demand with the supply of the tokens requested by the person making the withdrawal. If there is not enough liquidity, the fund will not be able to respect the request and will have to close out, shutting investors outside their funds.
That is why these funds regularly go shopping. Historically, the best times for the ETFs to purchase fresh Bitcoin for liquidity purposes have been the times of pullback when markets are taking a breather and moving lower.
Bargain Hunting vs. Panic Selling?
Against that backdrop, there is an interesting interplay between large institutional investors and small retail traders. While the ones with the big checks go bargain hunting, the small players in the industry are selling and trying to get back in at a lower level. And this is not always working (or a good idea).
What’s Up with Bitcoin Prices Today?
Bitcoin prices early Monday pierced through the $63,000 mark, up 10% since Friday, as crypto market enthusiasts jumped right back in, causing a weekend rally. What helped stir a rally was a failed shooting attack on Donald Trump, who has been a vocal proponent of digital assets. His recent comments include “ending the war on crypto that Biden has started” and making sure that all remaining Bitcoin “will be made in the USA.”
It appears that crypto markets are already pricing in Trump’s victory in the November elections. If so, the industry has lots of bright prospects ahead. Trump has also confirmed his attendance at the upcoming Bitcoin conference scheduled for July 27. At the event, he is expected to address the audience and speak favorably of digital assets, broader adoption, and bigger and better things coming for the crypto space in the US.
