Bitcoin Leads Record-high ETF Inflows
Bitwise’s research team, including André Dragosch, Max Shannon, and Ayush Tripathi, noted that the U.S. Dollar Index (DXY) has fallen 10% year-to-date, while gold has climbed 50%, surpassing the 27% gain of Bitcoin in the same period. Despite this, investors continue to see BTC as a “digital hedge” offering stronger long-term potential against monetary debasement.
The majority of capital inflows were directed to spot Bitcoin exchange-traded funds (ETFs), which accounted for $3.49 billion of the total. Ethereum-based products followed with $1.49 billion, while other altcoin ETPs received around $685 million. U.S.-listed ETFs led the activity, with BlackRock’s iShares Bitcoin Trust (IBIT) and Bitwise’s BITB capturing most of the demand.
Onchain data from the report showed that whale investors withdrew more than 49,000 BTC from exchanges, suggesting long-term accumulation. The combination of positive spot buying and moderate leverage points to a steady, rather than speculative, rally.
Bitwise concluded that as the fourth quarter historically brings liquidity tailwinds, “Investors positioned on either side of the store-of-value debate could ultimately converge toward the same outcome, renewed capital inflows into digital assets.”
Fiscal fragility and shifting market drivers
Investor sentiment is also being shaped by concerns over the U.S. fiscal situation. Bitcoin advocate Paul Tudor Jones said that “the US fiscal landscape is now the key macro driver for risk assets,” pointing to rising deficits and growing interest costs, which are set to exceed $1 trillion annually. These pressures are fueling expectations for ongoing monetary easing — a scenario that has historically supported Bitcoin’s value.
Reports indicate that as foreign investors reduce holdings of U.S. Treasurys and the dollar weakens, capital is increasingly rotating toward “hard assets” such as Bitcoin. Tudor drew parallels to the late-1990s bull cycle, emphasizing that despite high valuations, the market’s steady pace and strong institutional participation suggest the rally could have further to run.
However, not all indicators are equally bullish. Researcher Axel Adler Jr. observed that small transaction activity, often led by retail traders, has been in decline since spring 2024, even as Bitcoin reached new highs. This divergence implies that the latest price rise may be driven largely by institutional investors, with retail participation showing signs of fatigue despite the market’s strong performance.
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