BTC’s ETF Flows Show Institutional ‘Long’ Conviction, Study Finds

A joint study from asset managers Avenir Group, alongside data firms Glassnode and CryptoVizArt, indicates that a substantial portion of inflows into US spot Bitcoin ETFs represents genuine, unhedged long positions, reflecting strong conviction from traditional finance institutions rather than arbitrage activity.

Key Takeaways:

• The study debunks earlier assumptions that most spot ETF capital is driven by basis trades hedging futures positions.
• Data reveals a strong correlation between ETF inflows and unhedged holding activity.
• This influx signals increasing acceptance of Bitcoin as a macro asset class with characteristics similar to gold, despite its ongoing correlation with liquidity cycles.
• Bitcoin’s performance is increasingly linked to traditional risk-on assets like equities and gold, while showing an inverse relationship with the US Dollar and indicators of credit market stress.

The launch of spot Bitcoin ETFs in the US was a pivotal moment for the crypto market, but questions persisted about the nature of the capital inflows. Was the adoption a result of arbitrage exploiting price differences between futures and spot markets, or did it indicate a fundamental shift towards cryptocurrency?

To address these questions, Avenir Group and Glassnode developed a framework to filter out arbitrage activity. Their findings, detailed in a new report, challenge the premise that all short positions in CME Bitcoin futures are perfectly hedged by ETF holdings.

“Despite our strict model that filters out arbitrage activity, data reveals a strong correlation between unhedged demand and spot Bitcoin ETF inflows,” stated Avenir Group researcher Helena Lam and Glassnode analysts UkuriaOC and CryptoVizArt.

The analysis concludes that a significant portion of the observed inflows reflects genuine, directional exposure, suggesting institutional investors are committing capital out of conviction.

This steady rise in ETF holdings signals a structural change, making Bitcoin increasingly treated as an institutional asset. This shift contributes to improved liquidity and potentially marks a maturing market landscape.

Bitcoin’s Evolving Financial Identity

Beyond the ETF landscape, the study examines Bitcoin’s function within the broader financial system.

“Bitcoin is increasingly behaving like a macro asset… Its performance now closely ties to broader financial conditions,” the researchers noted, highlighting points of correlation.

Key findings include:

• Bitcoin and traditional risk-on assets (S&P 500, Nasdaq, Gold) exhibit growing positive correlations.
• A notable inverse correlation with the US Dollar Index and credit spreads (like high-yield corporate bonds).
• A responsiveness to global liquidity cycles, with price movements aligning with expansion and contraction in the GLI.

  Supporting this narrative, Bitwise Europe’s research head, André Dragosch, linked global money supply expansions with Bitcoin’s price.

  “Statistical evidence suggests a long-run relationship,” Dragosch estimated that a $1 trillion increase in global money supply could translate to a $13,861 rise in Bitcoin’s price. While cautioning against short-term predictions based on these metrics, Dragosch highlighted Bitcoin’s position as a potential leading indicator for the money supply.

  The study collectively portrays Bitcoin as moving past its earlier “identity crisis” within traditional and crypto markets, increasingly integrating as a novel asset class with macro financial characteristics, despite specific correlations.

  This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.