Bitcoin is back in the spotlight with a stunning resurgence, as digital asset investment products witnessed a remarkable influx of $326 million in just one week. This surge, the largest since July 2022, reflects growing optimism among investors, largely fueled by the anticipation that the US Securities and Exchange Commission (SEC) is on the verge of granting approval for a spot-based Bitcoin ETF. The flood of new investment signals a significant shift in the crypto landscape.
Although this weekly inflow into digital assets ranks as the 21st largest on record, it underscores a lingering cautious sentiment among investors. However, experts believe that the approval of a spot-based Bitcoin ETF is highly probable in the coming months, heralding a pivotal moment for the industry from a regulatory perspective.
A regional breakdown of the investment inflows reveals that only 12% originated from the US, totaling $38 million. It suggests that American investors may be awaiting the SEC’s decision on the spot-based ETF. Most of the inflows came from Canada, Germany, and Switzerland, amounting to $134 million, $82 million, and $50 million, respectively. Additionally, Asia has recorded its largest weekly inflows at $28 million, reinforcing the global appeal of digital assets.
Bitcoin emerged as the primary beneficiary, absorbing 90% of the total inflows, amounting to $296 million. Notably, the recent surge in BTC prices also led to $15 million in inflows into short-Bitcoin investment products. Solana, another prominent digital asset, experienced a substantial influx of $24 million. However, Ethereum stood in contrast, as it continued to experience outflows totaling $6 million.
Insight Report: ‘Breaking down Bitcoin’s Rally’
Meanwhile, the market analysis firm Kaiko published an insight report, “Breaking down Bitcoin’s rally.” This report identifies a significant shift in market dynamics, with increased trade volumes and volatility. Market activity surged following a false rumor about a Bitcoin ETF, propelling BTC to its highest level since May 2022. Altcoins have also benefited from the increased trading volume, surpassing $15 billion on centralized exchanges.
Despite the surge in activity, liquidity levels have remained relatively unchanged, indicating that market makers’ behavior has yet to shift. Derivatives markets have seen considerable impact, with funding rates for Bitcoin perpetual futures turning positive, suggesting a bullish bias. Open interest is gradually recovering after a wave of liquidations.
Moreover, BTC’s implied volatility has shown a consistent surge, particularly in the near term. It means expectations of increased short-term volatility without any significant catalysts in December, while the SEC is due to rule on ARK & 21Share’s spot Bitcoin ETF application in January.
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