The adoption of spot Bitcoin exchange-traded funds (ETFs) by institutional investors surged by 27% in the second quarter of 2024, even amid a recent market correction. This trend highlights the growing interest from major financial players, which could push Bitcoin toward new all-time highs.
According to Vetle Lunde, a senior analyst at K33 Research, over 262 new institutional firms invested in spot Bitcoin ETFs during Q2, bringing the total number of professional firms holding these assets to 1,199 as of June 30. Lunde noted in an Aug. 16 post on X (formerly Twitter) that this marked a significant increase in institutional engagement.
Despite the growing participation of institutions, retail investors still hold the majority of Bitcoin ETFs. However, institutional investors increased their share of total assets under management (AUM) by 2.41 percentage points in Q2, now accounting for 21.15% of Bitcoin ETF holdings—up from 18.7% in Q1.
The continued rise in institutional adoption could be key to driving Bitcoin’s price higher, given the significant capital these investors bring to the market. Bitcoin’s ability to reach new all-time highs will likely depend on further institutional inflows.
Despite this momentum, Bitcoin has struggled to break above the $60,000 mark. On Aug. 14, Bitcoin dipped below this psychological threshold, currently trading around $58,370. Contributing to this slump are stagnant ETF inflows, which saw a minor rebound on Aug. 15 with $11 million in new investments—far short of the $81.4 million in outflows recorded the previous day.
ETF flows play a critical role in Bitcoin’s price movements, accounting for roughly 75% of new investment in the cryptocurrency during its climb past $50,000 earlier this year. As institutional involvement continues to rise, the potential for significant price appreciation remains, provided market conditions align.
Featured image from: cointelegraph.com