Bitcoin ETF Inflows Driven by Institutional Conviction, Study Finds

A new study has revealed that a significant portion of spot Bitcoin (BTC) ETF inflows is driven by long-term, unhedged demand from traditional markets, rather than arbitrage or hedged futures strategies. This finding suggests a more profound transformation in the crypto market, where institutional investors are showing genuine conviction in Bitcoin as an asset class.

The collaborative report by Glassnode and Avenir Group addressed the question of whether the influx of capital into US spot Bitcoin ETFs was authentic or merely the result of basis trades exploiting price differences between CME futures and spot markets. The study developed a new framework to filter out arbitrage activity and found a strong correlation between unhedged demand and spot Bitcoin ETF inflows. This indicates that much of the capital entering ETFs reflects genuine, directional exposure, suggesting that institutional investors are committing with conviction rather than merely probing the market.

The steady rise in spot ETF holdings signals a structural change in Bitcoin’s market profile. Bitcoin is increasingly being treated as an institutional asset, bringing more stable capital, improved liquidity, and signs of a maturing market. This shift is evident in Bitcoin’s behavior, which is now closely tied to broader financial conditions. Data shows growing positive correlations with traditional risk-on assets such as the S&P 500, Nasdaq, and gold, while inversely tracking the US Dollar Index and credit stress indicators like high-yield spreads.

Bitcoin’s responsiveness to the Global Liquidity Index (GLI) further highlights this shift, as it rallies during expanding liquidity and falters when financial conditions tighten. This evolving trend is supported by the connection between the global money supply and Bitcoin’s price, as noted by André Dragosch, the head of research at Bitwise Europe. While cautioning against using global liquidity measures for short-term predictions, the analyst noted that “statistical evidence suggests a long-run relationship,” estimating that every $1 trillion increase in global money supply could translate to a $13,861 rise in Bitcoin’s price.

In summary, the unhedged spot Bitcoin ETF flows indicate that Bitcoin is now a macro asset, with its performance closely tied to broader financial conditions and traditional risk-on assets. This transformation suggests a maturing market with more stable capital and improved liquidity, driven by genuine institutional conviction rather than short-term arbitrage strategies.