Bitcoin ETF inflows leave institutional demand unclear: CoinShares

Billions are flowing back into Bitcoin exchange-traded funds (ETFs), but the figures alone do not reveal how much of the demand comes from institutions, according to CoinShares.

US crypto investment products had attracted about $4.1 billion in September, with BlackRock’s iShares Bitcoin Trust ETF (IBIT) accounting for more than 53% of those inflows, CoinShares head of research James Butterfill told Cointelegraph.

Crypto investment products attracted about $3.5 billion across the industry over the preceding five trading days, CoinShares said in a Sept. 25 market update.

Asked whether institutional investors were returning to crypto, Butterfill said, “Potentially yes, but in the ETF world it is very difficult to disaggregate institutional and retail money.”

ETF buying can reflect arbitrage strategies as well as bets on rising Bitcoin prices, making inflows an imperfect measure of bullish conviction. Butterfill also sees investors looking beyond tokens to businesses that profit from crypto adoption.

IBIT offers clues to institutional demand

Butterfill said many institutional investors use IBIT for the Bitcoin basis trade.

The strategy involves buying shares of a spot Bitcoin ETF while shorting Bitcoin futures, with the aim of profiting from the difference between spot and futures prices as they converge.