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Bitcoin ETFs Attract $2.2B in Weekly Inflows, BlackRock Leads the Pack

Bitcoin ETF continues to attract investments

Bitcoin ETFs have marked another milestone, recording net inflows of over $2.2 billion in just one week, from February 12 to February 16. This surge in investment outpaces the performance of all other ETFs among the 3,400 available in the United States, signaling a growing investor confidence in cryptocurrency as a viable asset class. 

Bloomberg analyst Eric Balchunas highlighted the unprecedented inflow, with BlackRock's Bitcoin ETF, IBIT, leading the charge by amassing $1.6 billion. This figure represents a significant portion of BlackRock's overall ETF inflows. 

Balchunas noted:

"$IBIT alone has taken in $5.2b YTD, which is 50% of BlackRock's total net ETF flows, out of 417 ETFs," 

Other Bitcoin funds also saw considerable inflows, indicating a broad-based interest in cryptocurrency investment. Fidelity’s FBTC attracted $648.5 million, Ark 21Shares’ ARKB garnered $405 million, and Bitwise’s BITB drew $232.1 million over the same period. 

These inflows reflect a robust appetite among investors for exposure to Bitcoin through traditional financial instruments, underscoring the cryptocurrency's integration into mainstream finance.

Market impact and regulatory developments

The influx of capital into Bitcoin ETFs is propelling Bitcoin's price upwards. The cryptocurrency has soared 91% over the past four months, buoyed by positive market sentiment following the U.S. Securities and Exchange Commission’s (SEC) approval of these funds. In the last week alone, Bitcoin's value increased by nearly 7%, trading at $51,434, marking a 24% rise in February.

However, the performance of Bitcoin ETFs is a tale of two narratives. While new funds like BlackRock's IBIT are witnessing unprecedented inflows, Grayscale’s Bitcoin Trust (GBTC) has experienced $624 million in outflows, highlighting investor migration to products offering lower fees and potentially higher liquidity. Since its conversion to an ETF on January 10, GBTC has seen a capital drain of over $7 billion, reflecting shifting investor preferences within the crypto fund ecosystem.

Amidst these market movements, major banks and financial institutions are seeking regulatory clarity. A coalition of trade groups representing Wall Street's titans has urged the SEC to revisit the Staff Accounting Bulletin 121 (SAB 121), advocating for amendments that would facilitate banks acting as custodians for Bitcoin funds.