A BlackRock exchange-traded fund (ETF) investing in Bitcoin (BTC) saw record inflows of $520 million on Wednesday, marking the largest daily intake for any US ETF across asset classes so far this year.

All this comes as the price of Bitcoin tests $64,000 and is just a step away from its historical highs of 2021. The market is currently dominated by speculative frenzy, and “greed” is at a level never seen before.

BlackRock Bitcoin ETF Sees Record Inflows amid Crypto Rally

The BlackRock iShares Bitcoin Trust (IBIT) has seen steady investor demand, registering 32 consecutive days of inflows. As of Wednesday, nine Bitcoin spot ETFs combined saw trading volume over $2.6 billion, with IBIT breaking its own record at $1.5 billion.

Source: Bloomberg

The surge of investments into Bitcoin ETFs comes amidst a broader rally in cryptocurrency prices. Bitcoin hit a two-year high on Wednesday, nearing its all-time record, while other major digital assets like Ethereum also saw significant gains.

Analysts say the successful launch of Bitcoin spot ETFs in January 2024 has opened the door to fresh investments from wealth managers, hedge funds, and retail traders. The ease of trading Bitcoin via ETFs is helping drive its price higher by boosting demand.

Bitcoin price. Source: CoinMarketCap

“The market is waking up to the fact that Bitcoin is now easily accessible to the masses and that we are only just scratching the surface as far as mainstream adoption goes,” said Joel Kruger, the Market Strategist at LMAX Group. “We also believe there has been plenty of excitement around lower correlations with US equities, which makes Bitcoin all the more attractive as an investment for portfolio diversification.”

Everyone is excited about #Bitcoin possibly reaching $100k.

Some people say they won’t sell their Bitcoin when it hits that price,

but in reality, many probably will.

Reaching $100k is a big deal for Bitcoin,

Those who sell at $100k might regret it,

They will FOMO… pic.twitter.com/ZrHChNxBTi

— MDB (@MDBitcoin) February 29, 2024

Clearly, the demand for leverage in the cryptocurrency market is influencing investors’ behavior. Higher costs in the futures market and decentralized finance are leading to an increased need for crypto borrowing.

“Investors are increasingly seeking avenues to obtain liquidity in a high-rate environment, prompting them to turn to lending platforms that offer lending and futures services within an easily navigable interface,” commented Andrey Stoychev, the Project Manager at Nexo. “The demand for borrowing in familiar settings is not just a reflection of the market’s adaptability to external economic factors but also leads to a significant trend in the cryptocurrency ecosystem.”

WisdomTree European BTC ETPs Exceed $500 AuM

Another issuer of exchange-traded instruments, WisdomTree, also reported record results. Its European cryptocurrency exchange-traded products (ETPs) have surpassed the $500 million mark in assets under management. This figure marks a historic peak for WisdomTree’s European crypto ETPs, which have experienced net inflows of $59 million into their portfolio in 2024, predominantly driven by WisdomTree Physical Bitcoin.

Delighted to share that WisdomTree’s European physically backed #Crypto ETP range now exceeds $500m in AUM! This represents an all-time high for the range which offers investors a simple, secure and low-cost access to crypto. For more info: https://t.co/pPqTPrCB8D pic.twitter.com/xsN5bUiQDR

— WisdomTree in Europe (@WisdomTreeEU) February 29, 2024

According to market experts, the inflows have been primarily driven by retail investors rather than institutions. As more financial advisors get approved to offer Bitcoin ETFs to clients, analysts expect volumes to increase further over the next year.

“The launch of spot bitcoin exchange-traded funds in the US has changed the way many investors look at cryptocurrencies as an investable asset class,” Alexis Marinof, the Head of European branch of WisdomTree, said. “As attention turns to the Bitcoin halving expected in April, investors are seeing more potential within the asset class.”

Holy shit.. the Blackrock ETF alone net bought more than 10k BTC yesterday 👀 https://t.co/kddfWFQK5Y

— hodlonaut 80 IQ 13%er 🌮⚡🔑 🐝 (@hodlonaut) February 29, 2024

Greed Is Everywhere

Bitcoin’s price has more than doubled over the last months, recently exceeding $64,000. This rapid price growth has led to euphoric sentiment, with the crypto fear and greed index reaching its highest level (86) since Bitcoin hit its previous all-time high of around $69,000 in November 2021.

Crypto Fear and Greed Index. Source: CoinMarketCap

This index ranges from 0 to 100, with 0 representing “extreme fear” and 100 representing “extreme greed”. A high index level signals that investors are becoming overly greedy, believing that cryptocurrency prices will continue to rise. This often precedes a market correction as prices eventually become detached from fundamentals.

Some analysts argue that such high greed signals that the crypto market is due for a correction, as excessive optimism generally foreshadows a price reversal. Ultimately, while extreme greed suggests crypto prices have significant room to fall, the durability of current market optimism makes the exact timing of a correction challenging to predict.

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