Bitcoin Returns and ETF Flows: Correlation and Causation

Bitcoin ETFs Report, September 2024

Some people thoughts the Bitcoin ETFs would be Bitcoin's saviours ushering a new bull market.

Clearly that did not happen. 

But that doesn't mean everything about the ETFs is looking bad. Actually so far the data shows a good amount of positive things associated to them.

But they are no miracles. So let's look at the data we have so far to understand what's actually going on.

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Bitcoin Returns and ETF Flows: Correlation and Causation

The Takeaway

Bitcoin ETF flows and monthly returns show a strong positive correlation, with ETFs now holding nearly 5% of total Bitcoin supply. This demonstrates their significant market presence.

Despite price volatility, ETF holders have shown resilience, with no major outflows since March. But overall inflow rates have slowed considerably post-launch.

The BlackRock Bitcoin ETF (IBIT) stands out as the only fund consistently attracting new inflows, while others have stagnated. This suggests relatively weak overall demand for Bitcoin exposure through ETFs.

The ETFs are positively impacting the market, but they haven't yet catalyzed the new bull run some anticipated. The data indicates a measured, rather than explosive, integration of Bitcoin into traditional finance channels.

Strong Correlations Between Flows and Returns