Bitcoin Rise Tests ETF Demand

We’d call it a bitcoin bounce, but no bouncy ball in the world behaves like the volatile digital asset.

Bitcoin’s price has risen significantly over the past week, hovering around $80,000, which is up from just under $60,000 in late June. A roughly 25% jump in recent days has been credited to an initial short squeeze, but other factors likely contributed to the price staying relatively high. 

“A lot of the price increase was more mechanical than demand-based,” said Matt Kaufman, head of ETFs at Calamos Investments, noting that the recently announced Treasury buybacks for long-term debt that (at least briefly) brought down yields also may have helped prop up bitcoin. But it’s also notable that the Securities and Exchange Commission issued its proposals for exemptions for crypto issuers, as the Clarity Act faces an uncertain future in Congress.

Follow the Money

As often happens when something appreciates, traders and investors pile in. As prices rose last week, about $2.4 billion flowed into bitcoin ETFs, marking one of the best sales weeks in months. That’s also notable as about $3.2 billion poured out of digital asset ETFs year to date through July, per data from Morningstar Direct. There are hints that institutional investors are once again buying, or at least have backed off from selling.