Are Bitcoin ETF inflows finally back after IBIT ETF’s 7% jump?

Bitcoin’s [BTC] price jumped over 8% to over $93K in the past 24 hours, at press time, following renewed ETF inflows led by BlackRock.

On the 2nd of December, BlackRock’s iShares BTC ETF (IBIT) netted $120 million in Daily Net Inflow, marking a 7% surge. Fidelity’s FBTC and Bitwise’s BITB also drew institutional inflows of $22 million and $7.4 million, respectively.

However, ARK Invest’s ARKB bled out about $91 million, bringing the total Daily Net Inflows to $58.5 million. 

Source: SoSo Value

Even so, the performance on the 2nd of December marked the fifth consecutive day of net inflows, which has stabilized the BTC price above $80,000.  

But do the positive inflows signal the return of the ‘Santa rally’? 

Macro and ‘Vanguard effect’ on BTC

For his part, Bloomberg ETF analyst Eric Balchunas viewed the IBIT-induced price recovery as the “Vanguard effect.”  

The world’s second-largest $11 trillion asset manager lifted the crypto ban on the 2nd of December, allowing over 50 million users to trade crypto ETFs, including IBIT. 

Balchunas said that the IBIT’s renewed inflow was likely driven by Vanguard clients. He added, 

“Also $1B in IBIT volume in first 30min of trading. I knew those Vanguardians had a little degen in them, even some of the most conservative investors like to add a little hot sauce to their portfolio.”

According to him, Vanguard saved BTC from the Q4 plunge. 

For Coinbase analysts, however, the easing macro front was juicing up liquidity and risk assets. 

“With quantitative tightening ending, the Fed is back in the bond market, and the drain of cash from markets may be behind us. That’s usually good for risk-on assets like crypto.”

The analysts highlighted that the current macro landscape favors ‘breakout trades over knife catching.’

Traders eye $100K level

Notably, the extended BTC drop in the past few weeks cleared key supports, including the $98K-$100K which was a significant cluster as a cost basis for most bulls.

For Coinbase analysts, this was the next key level to watch. 

Source: Coinbase/Glassnode 

Put differently, reclaiming $98K-$100K could attract more demand or cap BTC recovery if most bulls opt to break even and exit positions at the level. 

Swissblock analytics also echoed the Coinbase outlook. It projected a potential ‘tactical recovery’ from mid-December, citing past liquidity capitulation events that were followed by a strong rebound after 1–3 weeks.  

Source: Swissblock

Despite the optimism, the risk of the Yen carry trade unwinding still appears likely, with an 86% chance of a 25-basis-point rate increase by the Bank of Japan (BoJ) at its meeting set for the 19th of December. 

Final Thoughts

• Institutional inflows are back and have boosted BTC price recovery. 
• The macro landscape was also improving, but the risk of the Yen carry trade unwind was lurking.