Investors Shift $1.39B to Bitcoin ETFs as Inflation Eases and Risk Appetite Rises

Bitcoin price rose above $114,000 on Thursday morning, marking its highest level since August 24, as U.S. spot Bitcoin ETFs saw a record $757.1 million in net inflows on Wednesday, the highest in eight weeks. This surge coincided with improved macroeconomic indicators, particularly the Producer Price Index (PPI), which fell 0.1% in August—contrary to expectations of a 0.3% increase—signaling potential softening in inflationary pressures. Analysts attribute the inflows to these favorable economic readings, with DarkFrost of CryptoQuant noting that the news “was excellent for the market,” and indicating that Bitcoin’s rise was supported by a 6.60% increase in open interest to $43.3 billion and positive funding rates.

The renewed institutional demand is evident in the performance of U.S. Bitcoin ETFs, which have accumulated $1.39 billion in September alone. Meanwhile, Ethereum-based funds have seen a net outflow of $668.72 million for the month, pointing to a capital rotation pattern where investors are shifting funds from Ethereum to Bitcoin ahead of the Federal Reserve’s rate decision on September 17. Illia Otychenko, an analyst at CEX.IO, described this as a sign that market participants are positioning themselves for potential monetary easing. The CME Group’s FedWatch tool indicates a 92% chance of a 25 basis-point rate cut and an 8% chance of a 50 basis-point cut, further reinforcing the risk-on sentiment.

Bitcoin’s price action has also been supported by broader equity market performance. The S&P 500 and Nasdaq both hit record highs on Wednesday, while the Nikkei 225 rose by over 1% to a fresh high on Thursday. This risk-positive environment appears to have encouraged investors to deploy capital into riskier assets, including Bitcoin. The price exceeded its 50-day Exponential Moving Average (EMA) of $112,981 on Wednesday, closing above it and trading at approximately $114,000 by Thursday. Technical indicators such as the RSI and MACD suggest that bullish momentum is gaining strength.

Additionally, stablecoin activity on major exchanges has pointed to growing liquidity in the crypto space. Binance, for example, recorded a net stablecoin inflow of over $6.2 billion on Monday, with its available stablecoin reserves reaching a new all-time high near $39 billion. Such liquidity can act as a source of buying power in the market, supporting further price appreciation. Analysts have highlighted that rising stablecoin reserves may indicate traders preparing to deploy capital in anticipation of price movements.

Looking ahead, market participants will closely watch the upcoming release of U.S. Consumer Price Index (CPI) data, which will provide further insight into the trajectory of inflation and the potential for additional Fed rate cuts. Stephen Gregory, founder of crypto trading platform Vtrader, suggested that expectations for a larger-than-anticipated rate cut—possibly 50 basis points—may be influencing Bitcoin’s recent ETF inflows. If the CPI data aligns with the softer inflation narrative, it could further support Bitcoin’s upward trajectory, potentially pushing the price toward $116,000 and beyond.