Institutions Are Back to Pouring Money into Bitcoin as a “Perfect Storm” Brews for the King

Out of the total inflow of $226 million, Bitcoin accounted for $225 million of it for its fourth straight week of inflows as sentiment towards BTC turnarounds.

For the 8th week in a row, digital asset investment products saw inflows of $226 million, bringing the total inflows of $638 million, according to CoinShares’ weekly report.

Ethereum (ETH), however, saw outflows through minor at $14 million and continues to lose market share to Bitcoin (BTC), having fallen 1% to 24% of assets under management (AUM) over the last week.

When it comes to other altcoins, Polkadot (DOT), Ripple (XRP), and Litecoin (LTC) also recorded outflows of $2.1 mln, $0.6 mln, and $0.2 mln, respectively.

Meanwhile, the recent favorites Solana (SOL) and Cardano (ADA) continue to see inflows of $12.5 mln and $3 million, respectively.

The positive thing is total AUM is currently just 5% short of the all-time high at $67 billion due to positive price action. While altcoins like SHIB, AXS, FTM, STX, and OHM see an increase in price, it is Bitcoin that is shining right now.

Up more than 30% in October and 20% in the past week, Bitcoin has taken the reins back to become a trillion-dollar asset class yet again.

With this price performance, it makes sense that in the week ending October 8, Bitcoin products accounted for a significant majority, almost all, of these inflows at $225 million. It has been the fourth straight week of inflows for the leading cryptocurrency.

“We believe the turnaround in sentiment towards Bitcoin is due to constructive statements from SEC chair Gary Gensler, potentially allowing a Bitcoin ETF in the US. Our recent survey data also highlights greater institutional participation in the asset class,” wrote James Butterfill, investment strategist at CoinShares.

Bitcoin actually looks primed to hit $60,000 as it currently trades comfortably above $57,000. While the relative strength index (RSI) at 70 is suggesting that it is entering the overbought territory, open interest in BItcoin futures has been surging since the start of the month to now surpass $20.5 billion.

Not to mention, CME’s Bitcoin contango remains well above other crypto exchanges while the highest Bitcoin funding rate, as of writing, is 0.0212% on Deribit.

The CME bitcoin futures basis increasing at a faster rate than the futures curves on non-regulated derivatives exchanges suggests that institutional investors are buying BTC futures that can further put upward pressure on BTC and lead to an even steeper curve.

Another potential reason for Bitcoin outperforming altcoins is the market pricing in an increased probability of approval for a futures-based Bitcoin exchange-traded fund (ETF) by the SEC this month.

Interestingly, as NYDIG pointed out, the number of contracts that a participant such as an ETF can own on the CME is being raised to a total of 6,000 from October 18th, the same day the first futures ETF may be deemed effective.

As we have been reporting, SEC Chairman Gensler has been hinting at a possible futures-based ETF for months now.

“When you combine the centralized failures (Facebook and its owned companies going down, public fight between the US and China, and Senator Walling calling for a Fed investigation) with regulatory uncertainty, a weakening tech sector, and renewed inflation fears, it became a perfect storm for Bitcoin,” said Jeff Dorman, Chief Investment Officer at Arca.

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