Spot Bitcoin ETFs are seeing institutional withdrawals at a record pace.
Bitwise CIO Matt Hougan said the product is heading for its strongest quarter ever as news agency approvals and inflation-hedging demand free up new pools of capital.
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Distribution unleashes ETF momentum
By the end of the third quarter, Bitcoin ETFs had collected $22.5 billion and are expected to reach $30 billion by the end of the year.
The trading value of US Bitcoin spot funds increased to $7.5 billion in one day this month. This demonstrates sufficient liquidity to process orders for large institutional investors with minimal slippage.
As Bitcoin surpassed $100,000 and hit $125,000, ETF activity rose in tandem. $IBIT led weekly ETF flows, accounting for $3.5 billion or about 10% of total inflows into the U.S., Bloomberg’s Eric Balchunas said.
All 11 spot ETFs, including $GBTC, ended the week in the green, in what he called “two steps forward mode.”
Hogan outlined three key factors behind this surge.
Sponsored Sponsored Wirehouse Distribution: Major brokerage firms such as Morgan Stanley and Wells Fargo are now offering crypto ETFs directly to their clients, providing thousands of advisors with regulated access to Bitcoin. “Downgrade trade”: Investors are shifting to rare assets such as gold and Bitcoin to prevent currency dilution and fiscal expansion. Reflexive Momentum: Rising prices attract media coverage, spurring more ETF purchases and reinforcing the rally.
Hogan pointed to new guidance from Morgan Stanley that allows advisors to allocate up to 4% of their portfolios to cryptocurrencies. The policy could direct trillions of dollars to regulated products.
Wells Fargo and Merrill Lynch followed suit, expanding their pipelines of institutional investors. He added that Bitcoin’s strong quarters often coincide with billions of dollars in inflows, strengthening the price-capital link.
BlackRock’s IBIT takes the lead with Bitcoin ETF dominance
BeInCrypto reports that IBIT is currently BlackRock’s most profitable ETF, generating $244.5 million annually from 0.25% fees and nearly $100 billion in total assets under management. Despite its large size, it outperformed the S&P 500 ETF (IVV).
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IBIT is approaching $100 billion in less than 450 days, compared to Vanguard’s VOO, which has surpassed $200 billion, making it the fastest-growing ETF ever, according to Bloomberg data.
This dominance narrows, widens, and increases liquidity, allowing institutional flows to circulate efficiently. US funds now hold about 90% of the world’s Bitcoin ETF assets, underscoring Wall Street’s growing grip on digital asset liquidity.
Market structure changes across cycles
Analysts say this wave of inflows is reshaping Bitcoin’s market structure. James, co-founder of Checkonchain Analytics, told BeInCrypto that the ETF inflows (about $60 billion so far) represent “tens of billions of dollars of new institutional capital” as well as on-chain holders flowing into funds.
He added that long-term investors are realizing profits of $30 billion to $100 billion per month, and price acceleration has slowed despite increased demand.
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“Some holders are moving from on-chain to ETFs, and that is happening. But they are not the majority. Demand is huge, with institutional investors reaching tens of billions of dollars, but there is still sell-side pressure. Since October 2024, IBIT has been the fastest growing fund ahead of its peers and is still the only fund with continued inflows. The US now accounts for about 90% of global ETF holdings.”
K33 Research claims that institutional adoption and macro policy adjustments have ended Bitcoin’s four-year halving rhythm. It has been replaced by a liquidity-driven regime.
James echoed this view, saying, “Instead of the world reacting to Bitcoin, Bitcoin now reacts to the world.”
ETF inflows, sovereign allocations, and derivatives growth are providing new support for price discovery. K33 data shows that open interest and momentum remain high but not extreme, suggesting a short-term correction rather than a structural reversal.
Still, skeptics warn that rising leverage could cause a short-term pullback. A key question is whether the multibillion-dollar trading days reflect new inflows or rotation from legacy funds like GBTC.
For now, record volumes, wide distribution, and deep liquidity all support Hogan’s hypothesis that expanded access to wirehouses is Bitcoin’s strongest tailwind heading into the end of the year.
