Author: 636Marx
The trading volume of Bitcoin reached $5 billion yesterday, and it even absorbed over $870 million of astonishing funds on the 29th. Bitcoin is currently only $157 away from its all-time high on March 14 this year. Major institutions such as Blackstone Group and Fidelity Investments play a key role in this, and their ETFs have attracted a large amount of investment. Particularly, Blackstone's iShares Bitcoin Trust Fund has absorbed over $523 million, setting a new record high since March. With Bitcoin's price hovering at a high level, investing in Bitcoin through ETFs is becoming a wise choice.
The Rise of Bitcoin and the Charm of ETFs
Multiple factors have driven the recent price increase of Bitcoin, including broader economic conditions and regulatory progress, which have boosted the confidence of institutional investors. This month, the price of Bitcoin reached around $73,620, setting a new high in this round of the bull market. At the same time, Bitcoin spot ETFs (especially the ETFs to be launched by major companies such as BlackRock and Fidelity in 2024) have witnessed unprecedented capital inflows, with some daily inflows exceeding $550 million. It is worth noting that the iShares Bitcoin Trust (IBIT) under BlackRock has already ranked among the top three most popular ETFs in the US this year, managing about $22.8 billion in assets - an explosive growth for a product that was only launched in January this year.
The appeal of ETFs lies in their ability to package Bitcoin into a traditional, SEC-regulated financial instrument, thus bridging the gap between the crypto market and institutional investors. This structure not only enhances people's confidence in its stability, but also simplifies tax considerations. Bitcoin spot ETFs have changed the nature of the digital currency bull market, which is a lesson the author has learned in recent days.
How are "Blue Chip" Crypto Assets and Niche Cryptocurrencies Rotating?
Contrary to public perception, the market rotation is a sign that capital is shifting from niche cryptocurrencies to more "blue chip" crypto assets such as Bitcoin and Ethereum. In the ongoing environment of financial uncertainty, Bitcoin as a "digital gold" or inflation hedge tool will attract institutional capital away from smaller-scale, higher-risk assets.
Ethereum will also benefit from this wave of appreciation, although to a lesser extent. While some outliers like SUI have seen extraordinary rallies today, the persistent capital flow is pouring into Bitcoin, with the initial increase strengthening investors' confidence in the main assets. Just as reproductive rights in ancient times only circulated among the rich, and the poor could not afford them, the rotation of capital is creating new poor people from the formerly wealthy.
Why Is Bitcoin the Only One Rising in the Entire Digital Market?
The author believes that the most direct reason for the rise of Bitcoin is that the SEC has recently approved several Bitcoin spot ETFs, signaling a change in regulatory attitude, which is seen by mainstream capital as a recognition of Bitcoin's legitimacy in the US financial field. The launch of ETFs by financial giants such as BlackRock, Fidelity, and Bitwise has brought Bitcoin closer to mainstream acceptance, making it easier for the "Old Money" that previously held a cautious attitude towards direct digital currency investment to participate.
For retail investors, they can only see the prosperity of the market and the intensification of competition. In the long run, the reduction of ETF fees by institutions and further encouragement of retail participation will benefit the vast retail market. Although institutional capital currently dominates, the expansion of ETF options provides the largest retail market with the simplest entry point into the crypto market. Therefore, only Bitcoin is rising, and there is no rotation effect of small-cap coins in previous bull markets, and the ranking of old coins will become less and less affected by the rotation effect.
Will Bitcoin's Continued Rise Be Temporary Volatility?
The author is hesitant to make a definitive judgment on whether the current rise in Bitcoin's price can be sustained as it approaches its historical high. However, the inflow of ETF funds indicates the confidence of "Old Money", but the value of Bitcoin may change rapidly due to economic factors and new regulations. The purchase of Bitcoin by "Old Money" is different from crypto circle investment, and it may help hedge economic risks.
The author believes that the price of Bitcoin needs to strike a balance between innovative financial concepts and traditional finance. BTC, which has gained more capital and attention, must change its price appreciation trajectory, and this can be referenced from the spot gold market. This bull market may help Bitcoin become a serious financial asset.
