Growing capital inflows into cryptocurrency investments persist, attributed to the approval of Bitcoin spot ETFs in January. Last week, Bitcoin saw inflows totaling $1.97 billion, while Ethereum recorded positive flows of $69 million.
Crypto Investments Hit $2 Billion Last Week
Cryptocurrency investment inflows have reached $4.3 billion over five weeks, with the latest week recording positive flows of $2 billion. Bitcoin led the way with $1.97 billion in inflows, followed by Ethereum with $69 million.
According to BTC veteran Kyle Chassé in a Monday post on X, Ethereum experienced a significant week with $69 million in inflows, marking its highest level since March.
Bitcoin has witnessed 19 consecutive days of inflows, driven by increasing interest from both institutional and retail traders. Currently, ETFs hold 5% of all Bitcoin, with 34 ETFs controlling over 1,000,000 BTC. Last week, 11 ETFs approved by the US Securities and Exchange Commission (SEC) purchased 25,729 BTC, nearly eight times more than the 3,150 BTC mined during the same period.
As of Monday, Bitcoin ETFs in the US collectively hold nearly 5% of all BTC, amounting to 1,043,775 BTC according to Coinglass. With a circulating supply of 19.71 million BTC and a current Bitcoin price, the total value stands at $1.36 trillion, with an eventual limit of 21 million BTC expected to be reached over the next century.
Despite investors seeking exposure to BTC through ETFs, Bitcoin’s price has struggled to reclaim its all-time high of $73,777, recorded on March 14. Experts attribute this to significant shorting activities among hedge funds.
Historically, hedge funds have employed shorting strategies on BTC as part of their trading approach, selling futures contracts to capitalize on anticipated price declines. Sina G, co-founder of BTC-focused 21st Capital, highlighted that hedge funds engaging in short positions on BTC may indicate their involvement in the carry trade strategy. This strategy entails shorting futures while concurrently purchasing the asset to leverage price disparities between the spot and futures markets.
In a common scenario, a short squeeze occurs, where Bitcoin prices start to increase, compelling those with short positions to purchase BTC at higher prices to close their positions. This surge in buying pressure amplifies Bitcoin’s price, prompting more short sellers to exit their positions and contributing to the upward price momentum.