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BlackRock Bitcoin ETF Surpasses $30B as U.S. ETFs Approach 1M BTC Holdings
Bitcoin exchange-traded funds (ETFs) in the U.S. have reached record inflows, with BlackRock’s spot Bitcoin ETF holdings surpassing $30 billion, less than 10 months since its January launch. BlackRock now holds over 417,000 BTC, showing robust demand for the asset, especially in the run-up to the U.S. presidential election. On Oct. 29, Bitcoin ETFs saw $870 million in net inflows, marking the second-highest inflow day in 2024. Overall, these ETFs are on track to cross 1 million BTC in cumulative holdings, potentially surpassing 1.1 million BTC—more than the holdings in Satoshi Nakamoto's wallet—by November. Analysts project Bitcoin’s price could approach all-time highs, with Bitfinex analysts forecasting a potential rally to $80,000 by year’s end, though some view the rally as a speculative “Trump hedge.
Florida Official Proposes Bitcoin Inclusion in State Pension Funds
Florida Chief Financial Officer Jimmy Patronis has requested the Florida State Board of Administration (SBA) to assess the potential benefits and risks of including Bitcoin in the state’s retirement funds. In his Oct. 29 letter, Patronis argued that Bitcoin, often termed "digital gold," could serve as a hedge and diversify the state’s portfolio. He suggested a pilot program through the Florida Growth Fund to explore crypto investments. This proposal aligns with Governor Ron DeSantis’ anti-CBDC stance and follows recent moves by states like Wisconsin and Michigan, which have incorporated Bitcoin into their pension portfolios. The SBA manages over $205 billion in assets, with a report on Bitcoin's feasibility expected before the 2025 legislative session.
Circle Increases USDC Redemption Fees, Impacting High-Volume Cash-Outs
Circle has raised redemption fees for its USD Coin (USDC), primarily impacting institutional investors and high-volume traders. The fee structure, effective since September, applies to daily USDC redemptions over $2 million, with rates starting at 0.03% and reaching up to 0.1% for redemptions above $15 million. This marks the second fee increase this year, following Circle’s February introduction of swap charges on redemptions above $15 million. The fee adjustments respond to heightened demand for liquidity, allowing traders fee-free redemptions if they opt for a two-day processing time. Circle, currently aiming for an IPO and with plans to relocate to Wall Street by 2025, is expanding its market reach amid tightening competition and regulatory pressures. Its USDC has seen a shrinking market share, now around 20%, as Tether dominates the stablecoin market.
Trading Desk Insights
Bitcoin recently approached its all-time high of approximately $73,800, which has significantly increased demand for ETFs, especially with the upcoming U.S. elections. Bitcoin's value has surged by nearly 75% this year. The launch of spot ETFs, new rounds of monetary easing by major economies, and the rising prospects of a win by crypto-friendly candidate Donald Trump have all been key growth drivers. High ETF inflows reflect robust investor confidence, which can elevate prices in the short term due to prevailing supply and demand dynamics and heightened trader sentiment. Notably, large investors have begun locking in profits as Bitcoin nears peak prices, although the volume of realized profits has begun to decline since reaching its highest on October 8, indicating a potentially stabilizing market.
In other market news, TIA tokens worth $920 million are set to be released on October 3, increasing the supply by 80%. Despite a significantly negative funding rate and widespread awareness of this event, market dynamics suggest a bullish outlook could prevail.
On the ETF front, Bitcoin has seen substantial activity with inflows reaching $870.1 million, marking the third highest on record and the largest since early June. Trading volume surged to $4.75 billion, the highest since early August. Meanwhile, Ethereum saw modest inflows of $7.6 million, with volumes slightly above average. U.S.-based ETFs are nearing holdings of 1.1 million BTC, approaching the total held by Bitcoin's creator, Satoshi Nakamoto. Blackrock's ETF, IBIT, surpassed $30 billion in assets, reaching this milestone significantly faster than the renowned gold ETF, GLD.
From a geopolitical angle, Coindesk reports significant movements by the Bhutan government, which transferred a large portion of its $900 million Bitcoin holdings to exchanges, sparking concerns of potential selling that could impact Bitcoin prices.
Economic data presents a mixed picture: the U.S. GDP growth rate slowed to 2.8% annually in the third quarter, falling short of the 3% expectation. However, the labor market outperformed expectations, suggesting underlying economic strength.
In the equity markets, futures remained steady as the market processed a slew of earnings reports with anticipation building for upcoming earnings from major tech companies like Meta Platforms and Microsoft, followed by Apple and Amazon later in the week.
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This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.
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