Bitcoin ETFs See $2.8 Billion Inflows, Price Jumps 10.6%

U.S. spot bitcoin (BTC) ETFs have seen significant net inflows, totaling approximately $2.8 billion over the past five trading days. This influx has contributed to the rise in bitcoin's price, which has increased from around $85,000 to $94,000. Notably, the iShares Bitcoin Trust (IBIT) has accounted for $1.3 billion of these inflows.

Michael Saylor, Chairman of the largest listed bitcoin holder Strategy (MSTR), made a bold prediction at the Bitcoin Standard Corporation’s Investor Day. He stated that "IBIT will be the biggest ETF in the world in ten years." This statement underscores the potential growth and impact of bitcoin ETFs in the financial market.

Currently, IBIT has a market capitalization of $54 billion, which is significantly smaller compared to the largest ETF by market cap, the Vanguard S&P 500 ETF (VOO), which boasts a market capitalization of $593.5 billion. This comparison highlights the substantial growth that IBIT would need to achieve to become the largest ETF.

Eric Balchunas, a Senior ETF Analyst, acknowledged the possibility of IBIT becoming the largest ETF, but emphasized that it would require extraordinary circumstances. He noted that for IBIT to surpass VOO, it would need to attract inflows well north of $1 billion a day, potentially in the range of $3 to $4 billion daily. This would be an unprecedented level of investment, indicating the challenges and opportunities ahead for bitcoin ETFs.

The annualized basis trade for bitcoin ETFs, where investors go long on the ETF and short on the CME bitcoin futures, has risen to nearly 10%, up from 5% in early April. This increase, along with a 2,000 BTC rise in futures open interest over the past week, suggests that a portion of the net ETF inflows may not be purely directional bets but part of the basis trade. This dynamic adds complexity to the market, as investors navigate both the potential for price appreciation and the strategic use of futures contracts.