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How bitcoin ETF benefit from hedge fund activity
Digital assets are becoming increasingly popular with traditional investors. Hedge funds, once sceptical about cryptocurrencies, are now actively investing in bitcoin ETFs.
According to recent data, more than 50% of hedge funds in the US invest in bitcoin ETFs, diversifying their portfolios. Analysts say such trends indicate the willingness of traditional investors to recognise the potential of cryptocurrencies. Analysis shows that the share of this asset class in portfolios does not exceed 2.5%. This indicates financiers’ caution and willingness to work with new instruments.
Characteristics of the increase in demand
The hedge fund activity is visible against the backdrop of the volatility in the digital currency sector. The price of bitcoin has been unstable in recent months. It rises to 63,000 dollars, then falls to 60,000. However, such processes do not scare investors. They continue to invest in crypto ETFs.
Experts believe that such activity helps to strengthen the market for digital assets. It fulfils several functions at once:
- creates the basis for market development;
- contributes to increased liquidity;
- increases demand from traditional investors.
Despite hedge funds’ interest, experts advise extreme caution. The main argument is the sector’s high volatility.
What is happening in the market
Market dynamics show that investors are not afraid of volatility. For example, in just one day, the Bitcoin ETF saw a net inflow of almost US$295 million. A day earlier, the figure was just over US$143 million. Total inflows into these funds for 2024 are estimated at US$15 billion. The following funds attracted the most interest:
- IBIT, run by investment giant BlackRock, received more than US$187 million;
- FBTC, represented by Fidelity, added US$61.5 million;
- Grayscale’s Bitcoin ETF attracted around US$25 million in investment;
- BITB, launched by Bitwise, raised US$11 million;
- investments in ARKB by ARK Invest totalled just over US$8 million.
Analysts say the increased demand may be due to the German government’s sale of cryptocurrency. Since the beginning of 2024, the German government has transferred more than 26 thousand bitcoins to digital wallets and exchanges. It equates to US$1.5 billion. According to Arkham Intelligence, the German central bank still has around 27.5 thousand coins. In addition, the market expects to receive another 94.8 thousand bitcoins or US$5.4 billion. This is to compensate customers of the Mt. Gox exchange.
The heavy market activity indicates a bearish sentiment. Analysts also note the strongest momentum in a year.