Spot Bitcoin ETFs are attracting institutional liquidity at a record pace.
According to Bitwise CIO Matt Hougan, products are heading for their best quarter yet as wire center approvals and demand for inflation hedging unlock new pools of capital.
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Distribution gives momentum to ETFs
By the end of the third quarter, Bitcoin ETFs had attracted $22.5 billion and are on track to reach $30 billion by the end of the year.
Bitcoin spot fund trading in the United States reached $7.5 billion in a single day this month, evidence of liquidity deep enough for large institutional orders with minimal slippage.
As Bitcoin surpassed $100,000 and reached $125,000, ETF activity climbed at the same rate. Bloomberg’s Eric Balchunas said $IBIT led weekly ETF flows with $3.5 billion, or about 10% of all U.S. inflows.
All 11 spot ETFs, including $GBTC, finished the week in the green, which he called a “two-step forward mode.”
Hougan highlighted three key factors behind this increase:
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- Cable distribution: Large brokerage firms such as Morgan Stanley and Wells Fargo now offer crypto ETFs directly to their clients, giving thousands of advisors regulated access to Bitcoin.
- The “business of debasement”: Investors are turning to scarce assets like gold and Bitcoin to protect against currency dilution and fiscal expansion.
- Reflexive impulse: Rising prices attract media coverage, which fuels more ETF buying and strengthens the rally.
Hougan highlighted new guidelines from Morgan Stanley allowing advisors to allocate up to 4% of portfolios to crypto. This policy could channel trillions into regulated products.
Wells Fargo and Merrill Lynch followed, expanding institutional pipelines. He added that strong Bitcoin quarters often coincide with inflows in the billions, strengthening the link between price and capital.
BlackRock’s IBIT Takes the Lead in Bitcoin ETF Dominance
BeInCrypto reported that IBIT is now BlackRock’s most profitable ETF, generating $244.5 million annually from 0.25% fees and nearly $100 billion in assets under management. It has outperformed the S&P 500 ETF (IVV) despite its larger size.
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Bloomberg data shows IBIT approaching $100 billion in less than 450 days, compared to more than 2,000 for Vanguard’s VOO, making it the fastest-growing ETF on record.
This dominance reduces, expands and increases liquidity, allowing institutional flows to recycle efficiently. U.S. funds now hold about 90% of global Bitcoin ETF assets, underscoring Wall Street’s tightening grip on digital asset liquidity.
Market structure evolves beyond cycles
Analysts say this wave of inflows is reshaping the structure of the Bitcoin market. James, co-founder of Checkonchain Analytics, told BeInCrypto that ETF inflows – around $60 billion so far – represent “tens of billions of new institutional capital,” not just on-chain holders jumping into funds.
He added that long-term investors are making between $30 billion and $100 billion in monthly profits, slowing price acceleration despite rising demand.
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“Some holders are migrating off-chain to ETFs – it’s happening. But they are not the majority. Demand has been enormous – tens of billions in institutional capital – but pressure from the sell side remains. As of October 2024, IBIT has outpaced its peers and remains the only fund with sustained inflows. The US now accounts for around 90% of global ETF holdings.”
K33 Research claims that institutional adoption and macroeconomic policy alignment have ended Bitcoin’s four-year halving pace. It was replaced by a liquidity-focused regime.
James echoed this view, saying: “Bitcoin now responds to the world rather than the world responding to Bitcoin.”
ETF inflows, sovereign allocations and the growth of derivatives have become the new anchors of price discovery. K33 data shows that open interest and momentum remain elevated but not extreme, suggesting brief corrections rather than a structural reversal.
Still, skeptics warn that increasing leverage could trigger brief pullbacks. The key question is whether the billion-dollar trading days reflect new inflows or turnover from traditional funds like GBTC.
For now, record volumes, broader distribution, and significant liquidity all support Hougan’s thesis: expanded access to wire centers is Bitcoin’s strongest tailwind as the end of the year approaches.
