ETF inflow reaches record levels
Trump's return to office may be uncertain for other sectors, but one thing is clear: Bitcoin has benefited immensely! As we know, Bitcoin's price has already surged past $78,000, surpassing its historical high, and it continues to climb, seemingly unstoppable. This rally is undoubtedly linked to the 'Trump effect.'
So what exactly is going on? Simply put, many in the market believe that Trump will implement policies favorable to digital assets after taking office, resulting in these investors pouring money into Bitcoin like they were charged with adrenaline.
ETF inflow reaches record levels, market enthusiasm is through the roof
The inflow of funds into the Bitcoin Spot ETF market has recently reached a historic high. For example, on November 7, the net inflow of funds into the U.S. Bitcoin Spot ETF reached $1.376 billion, with BlackRock's iShares Bitcoin Trust (IBIT) contributing $1.12 billion, accounting for 81.4%.
This is quite impressive! Do you know what such a large amount of capital flowing in means? It means that institutions are genuinely buying Bitcoin with real money. In the past month, the total inflow into the U.S. Bitcoin Spot ETF has reached $6.7 billion, totaling $25.5 billion since the beginning of the year. With so much money flowing in, no one can ignore it.
Purchased 18,000 units in a single day, the supply-demand relationship directly affects the price
Speaking of which, those ETF funds are not just talk; their operations can significantly impact the market. When ETF funds flow in, the fund must buy Bitcoin in the market, and that demand is very real. For example, on November 7, the purchase volume of Bitcoin Spot ETFs reached 18,000 units, while the newly mined Bitcoin that day was only 450 units.
Buying 18,000 vs. newly mined 450, do you think this supply-demand relationship might be a bit awkward? Supply remains basically unchanged, but demand surges, so the market will certainly raise prices. The rise in Bitcoin prices is not without reason.
ETF holdings approaching Satoshi Nakamoto, market confidence is high
Currently, the total holdings of the U.S. Bitcoin Spot ETF are approaching the number of Bitcoins held by Satoshi Nakamoto. Satoshi is said to hold a total of 1.1 million Bitcoins, while the holdings of the U.S. Bitcoin Spot ETF have reached 93%, or about 1.023 million units. With such a large amount of Bitcoin held by the ETF, just think about how strong the market's trust in it is.
Many people say that the expansion of Bitcoin Spot ETFs and the inflow of funds are signals of the market's confidence in Bitcoin. When institutional investors enter the market, it's like an advertisement: 'We are optimistic about Bitcoin!' Once market confidence is ignited, retail investors will follow suit, driving prices higher.
Spot ETF vs Futures ETF: Real Deal vs Copying Homework
Let me briefly explain the difference between Bitcoin Spot ETFs and Futures ETFs to avoid confusion. Spot ETFs are the real deal—they actually hold Bitcoin, with each share of the fund corresponding to a certain amount of Bitcoin. In other words, when a Spot ETF buys Bitcoin, the supply in the market decreases slightly, directly affecting the spot price of Bitcoin.
And what about Futures ETFs? Futures ETFs operate based on Bitcoin futures contracts, focusing more on 'betting on future prices.' Trading futures contracts does not directly impact the spot market as much. Therefore, the large influx of funds into Spot ETFs is one of the true driving forces behind this market trend.
Tight liquidity naturally leads to rising prices
Although the total circulation of Bitcoin sounds large, in reality, many Bitcoins are held by long-term holders—those who don't care about price fluctuations and just hold on tight. Therefore, when a large amount of capital enters Spot ETFs, the available quantity of Bitcoin in the market decreases. This leads to a very obvious supply-demand imbalance.
Additionally, ETFs themselves act as confidence amplifiers. Once there are any signs of movement, institutional giants increase their holdings, and retail investors follow suit, resulting in even fewer Bitcoins available for trading, leading to tightening liquidity. In this situation, the price is bound to rise.
Interestingly, although many people have a complex attitude toward Trump, his stance on Bitcoin seems to have generated a strong market response. The Trump effect is not only reflected in political influence but has also triggered significant volatility in the capital market, especially in digital assets like Bitcoin. Many might be surprised by how nuanced the relationship between Trump and Bitcoin has become, from initial criticism to now indirect benefits—a complete reversal.
Therefore, this surge in Bitcoin is indeed backed by a complex backdrop, with expectations of Trump’s policies, the influx of enthusiastic market funds, and the popularity of Bitcoin Spot ETFs all contributing to this market trend.
