Bitcoin ETFs Hit New Milestone as BlackRock Attracts $1.12B in Inflows

Bitcoin also reached new all-time highs over the past week, and analysts now suggest that BTC still has more growth potential. Additionally, Coinbase launched a wrapped Bitcoin token, cbBTC, on Solana to boost Bitcoin’s integration into decentralized finance (DeFi). For now, it seems like Bitcoin’s presence in both institutional and DeFi markets is stronger than ever.

BlackRock’s Bitcoin ETF Sees Unprecedented Inflows

BlackRock’s iShares Bitcoin Trust (IBIT) reached a huge milestone after it attracted a record $1.12 billion in net inflows in a single day. IBIT’s previous inflow high of $872 million was set on Oct. 30. The inflows also happened just one day after setting a record-breaking single-day trading volume of more than $4 billion.

Crypto analyst Rachael Lucas from BTCMarkets believes this spike in inflows happened due to a mix of factors, including BlackRock’s robust reputation, Bitcoin’s recent price rally, and more favorable broader market conditions. She also pointed out that investor confidence was likely boosted by other elements like institutional trust, fear of missing out (FOMO), and delayed capital inflows as well.

A big boost to market sentiment also came from the U.S. presidential election results after pro-crypto Republican candidate Donald Trump clinched a victory. Trump’s win sparked a lot of optimism in both equity and crypto markets. It even helped Bitcoin to surpass its all-time high. The Federal Open Market Committee’s recent decision to implement a 25-basis-point interest rate cut also added to this momentum.

Jeff Mei, the COO of the crypto exchange BTSE, shared that Trump’s pro-crypto stance, coupled with the Fed’s rate cut, created an environment that is ripe for institutional investment in the crypto sector. Mei also anticipates further rate cuts, favorable regulatory developments, and ongoing economic stimulus from China. All of this could continue to draw institutions towards BlackRock’s Bitcoin ETF in the coming months and into the new year.

The influx into IBIT contributed to a record $1.38 billion in net inflows across the 12 U.S.-based spot bitcoin ETFs on the same day. Together, these funds saw a total trade volume of $2.76 billion. 

Bitcoin ETF flow (Source: Farside Investors)

Fidelity’s FBTC recorded $190.92 million in net inflows, while Grayscale’s mini trust added $20.38 million. Other funds that are managed by firms like Ark & 21Shares, Bitwise, VanEck, and Valkyrie also reported net inflows. After its latest successful inflow day, the cumulative net inflows for these bitcoin ETFs reached $25.49 billion.

This surge isn’t limited to Bitcoin alone. Spot ether ETFs also reported increased activity after the election. The nine ether funds collectively reported $79.74 million in net inflows on Thursday, with trading volumes soaring to $466.39 million.

Bitcoin Shows No Signs of Cooling Off

Although Bitcoin reached new all-time highs this week, it is still not showing signs of being “overheated,” and could see even more gains, according to multiple analysts. Alex Thorn, Galaxy’s head of research, shared in a Nov. 7 report that the market is still fundamentally strong, which could support additional price momentum. Aurelie Barthere from Nansen agreed with this, and pointed out that Bitcoin’s recent record high, backed by high trading volumes, reflects sustained positive sentiment. Barthere also added that traders have been “re-risking,” which has helped fuel Bitcoin’s upward trajectory.

A look at Bitcoin’s funding rate shows stability. Thorn noticed that Open Interest (OI), which tracks unsettled Bitcoin derivative contracts, slightly increased to new yearly highs, though funding rates remain steady. A positive funding rate could suggest continued optimism as buyers pay sellers to hold positions. Thorn expects Bitcoin and other cryptos to trade well above current levels over the next 12 to 18 months.

From a technical perspective, some traders see room for Bitcoin to climb into the $78,000 to $85,000 range. At press time, BTC was trading hands at $75,876 after its price climbed by about 0.96% over the past 24 hours of trading. This was still higher than its previous high of $73,679, which crypto trader Matthew Hyland suggests indicates a potential continuation.

The U.S. Federal Reserve’s recent 25-basis-point rate cut on Nov. 7 is also considered as bullish for crypto assets. Lower interest rates generally make traditional investments like bonds less attractive, which pushes investors to seek higher returns in other assets like Bitcoin.

Coinbase Launches Wrapped Bitcoin on Solana

Bitcoin could also receive a nice boost from the decentralized finance sector. Coinbase introduced its own version of wrapped Bitcoin, cbBTC, on the Solana blockchain, which was its first token issuance on Solana. One of the main goals of this deployment is to increase Bitcoin’s role in decentralized finance (DeFi) by taking advantage of Solana’s ecosystem. 

Coinbase announced the launch of cbBTC on Nov. 7. The token will be available on various Solana-based DeFi platforms, including Jupiter, Meteora, Kamino Finance, Raydium, Phoenix, Jito, and Drift.

The cbBTC token was designed as a Solana Program Library (SPL) token, and is backed 1:1 by Bitcoin, allowing users to engage in Solana’s DeFi ecosystem with Bitcoin. Solana’s DeFi community is very supportive of the development, especially considering Bitcoin’s status as “king.” The community plans to establish cbBTC as a primary asset for DeFi activities. 

Coinbase’s Singapore country director, Hassan Ahmed, initially hinted at cbBTC’s launch during the Breakpoint event in September. So far, the exchange already issued 135 cbBTC, valued at approximately $10 million, according to Solscan.

The launch of cbBTC happened after the collapse of soBTC, which was a previous Solana-based wrapped Bitcoin asset tied to the FTX exchange, which depegged. Coinbase’s cbBTC now joins other Bitcoin-pegged assets on Solana, like Threshold’s tBTC, Zeus Network’s zBTC, and Wormhole’s WBTC.

Since its debut in September, cbBTC’s market cap soared past $1 billion. This positions it as a serious competitor to BitGo’s Wrapped Bitcoin (WBTC), which is already a very popular Bitcoin-backed asset on various layer-1 and layer-2 networks with its own $11 billion market cap.

In 2024, Solana’s DeFi sector saw some very impressive growth, with total value locked (TVL) rising by 250% to $8.25 billion, according to DefiLlama. Ethereum’s DeFi ecosystem recovered at a slower rate, with a TVL increase of 72% that now totals close to $60 billion. 

After Coinbase’s announcement, Solana’s native token SOL climbed by 3.4%, to reach $200 in early trading on Nov. 8.

SOL’s price action over the past 24 hours (Source: CoinMarketCap)

Wrapped Bitcoin (WBTC) is a tokenized version of Bitcoin that is designed to bring Bitcoin’s value and liquidity to other blockchains, mainly for use in DeFi. Each WBTC token is pegged 1:1 with Bitcoin, which means that one WBTC is backed by one actual Bitcoin held in reserve. 

This allows Bitcoin holders to take part in DeFi activities, like lending, borrowing, and trading, on blockchains like Ethereum and Solana, where native Bitcoin transactions aren’t possible. Wrapped Bitcoin also makes it possible for Bitcoin to be used in smart contracts and DeFi protocols. This broadens its utility far beyond just the Bitcoin network.