coindesk.com
The U.S.-listed bitcoin $BTC$64,090.52 exchange-traded funds (ETFs) are back in demand, spurring optimism among the crypto community. But a closer look at the data suggests the recovery in institutional interest is still remarkably thin.
The spot ETFs pulled in $75.67 million in investor money in the week ended June 17, following a more robust $197.40 million in the preceding trading week, according to data source SoSoValue. That's $273 million in fresh capital in two weeks, following an eight-week streak of outflows that saw investors yank over $8 billion from these funds.
The two-week inflow is a sign of bullish regime change, according to bTC and macro insights newsletter Ecoinometrics.
"ETF flows have settled into a much healthier balance between inflows and outflows. Even better, we’re beginning to see longer streaks of inflows reappear," the newsletter's Friday edition said.
"It suggests we aren’t simply looking at a temporary bounce after an extreme bout of selling. The underlying flow regime has genuinely improved," it added.
Similar bullish interpretations are making rounds on crypto social media, cheering the return of the so-called institutional demand.
That interpretation is intuitive given that ETFs, which let investors gain exposure to the cryptocurrency without owning it directly, are widely seen as a cleaner crypto market gateway for institutions. As a result, positive ETF inflows are taken to mean $BTC is receiving institutional support, while outflows suggest the opposite.
Bitcoin's price too has stabilized between $64,000 and $65,000 lately, offering hope that a bottom may be in. Prices peaked above $126,000 in October last year.
On the surface, it looks like the tide has turned. However, there is a massive caveat that makes these ETF inflows look like statistical noise rather than a structural shift.
The peanuts reality check
The hype surrounding this $273 million inflow quickly evaporates when compared to the carnage of the preceding eight weeks. During that two-month outflow streak, the market watched billions of dollars walk out the door.
To put the current "recovery" in perspective: the total amount of money that has entered the market over the last 14 days ($273 million) is barely more than the smallest single-week outflow recorded during that eight-week slump, which was $226.84 million in the week ended June 18.
In other words, it took two full weeks of "renewed optimism" just to offset the quietest week of the recent sell-off.