Institutional Demand Returns in Bitcoin Rally: $1.6 Billion Flows Into Spot Bitcoin ETFs

According to Bernstein analysts, Bitcoin’s price approaching $80,000 signals a new momentum shift in the market, thanks to increased liquidity, a recovery in spot ETF demand, and a more supportive regulatory environment.

After reaching as high as $79,500 on Friday, the Bitcoin price retreated to approximately $78,000. Bernstein attributed the move to the U.S. Treasury increasing its long-term bond buybacks. The Treasury announced that it would increase buybacks to $4 billion per operation through September 9, following a rise in long-term yields.

Analysts led by Gautam Chhugani stated that Bitcoin has historically reacted positively to liquidity increases. Noting that tightening financial conditions following the Iran conflict and capital shifting toward the AI and chip sectors had pressured the market, the team expressed that liquidity arising from debt-funded AI investments could be directed toward scarce assets like Bitcoin.

Bitcoin ETF inflows regain strength

Spot Bitcoin ETFs have also recovered. While approximately $7 billion in outflows were experienced in May and June, a net inflow of $1.6 billion was recorded this week. $606.3 million of this came on Thursday. Total assets rose from $70 billion in June to over $85 billion. BlackRock’s IBIT fund received the highest inflow of the day with $503 million.

Strategy supported its dividend reserves by selling only 0.8% of its Bitcoin holdings in recent weeks. The company’s 840,447 BTC returned to profitability with an average cost of $75,385, and unrealized gains exceeded $2 billion. While it was stated that cash reserves cover 2.8 years of dividends, it was reported that purchases could resume as STRC approaches its $100 par value. Analysts also expect the SEC and CFTC to accelerate rulemaking for crypto asset issuance, tokenized shares, and prediction markets, whether or not the Clarity Act, expected to be voted on September 15, passes.