BlackRock’s Bitcoin Spot ETF: Exploring Institutional Demand

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• According to a recent report, demand for Bitcoin surged to 27,095 BTC beyond June and July after BlackRock’s Bitcoin spot ETF application.
• The window for approving all current Bitcoin spot ETF applications ends on Friday, November 17. This date is particularly relevant to applications from Hashdex and Franklin.
• K33 analysts added that CME’s open position in Bitcoin exceeded 110,000 BTC last week, making CME the world’s largest bitcoin derivatives exchange.

How did BlackRock’s application for a Bitcoin spot ETF impact institutional demand for Bitcoin? Details on ETF applications!

Effects of BlackRock’s ETF Application on Bitcoin

In the past month, institutional investors’ demand for Bitcoin through exchange-traded products has significantly increased, and according to a recent report, demand surged to 27,095 BTC beyond June and July after BlackRock’s Bitcoin spot ETF application.

Vetle Lunde, Senior Analyst at K33 Research, and Anders Helseth, Vice President, stated that the continuous high risk on CME indicates strong institutional demand for Bitcoin as the Securities and Exchange Commission’s latest deadline for a bitcoin spot ETF approaches, beyond Bitcoin ETP entries.

The window for approving all current Bitcoin spot ETF applications ends on Friday, November 17. This date is particularly relevant to applications from Hashdex and Franklin. However, if the SEC wants to approve all applications simultaneously, this window could be used in this manner. After the window passes, although there is another date for Global X ETF on November 21, all current applications cannot be accepted simultaneously, according to analysts, emphasizing the next date on January 10. Lunde and Helseth added:

“In this scenario, momentum in the crypto markets may slow down as expected durations for significant news about ETFs can take weeks.”

CME traders are bullish, but the crypto community is not as optimistic.

CME traders continue to show a generally bullish stance, according to K33 analysts, as annualized premiums for both Bitcoin and Ether futures have remained above 15% for three consecutive weeks. K33 analysts added that CME’s open position in Bitcoin exceeded 110,000 BTC last week, making CME the world’s largest bitcoin derivatives exchange.

Particularly, this institutional optimism has not been reflected by crypto traders, according to Lunde and Helseth. Funding rates are drawing attention, as perpetuals have been trading at a premium consistently, and since November 9, they have been trading above neutral. Analysts note that this indicates the continuation of the latest Bitcoin rally driven by increasing attention from the short side, often leading to long liquidations with growing open interest.

Yesterday, Bitcoin positions witnessed the largest liquidation event since August, with a total of $89.5 million in long position liquidations on OKX, Binance, and Bybit, according to Velo Data. According to price data, Bitcoin’s price dropped from a peak of $36,740 to $35,230 with a 4% decline on November 14, then recovered and is currently trading at $36,120.

Ethereum futures are trading at a premium to Bitcoin.

BlackRock’s spot Ethereum ETF application attracted fresh buyers to CME’s Ether futures market, causing Ether to trade at a premium to Bitcoin for the first time since August. The basis is the difference between the spot price and the futures price of an asset.

Lunde and Helseth wrote, “Probabilities for spot Ether ETF approvals are slightly worse than Bitcoin spot ETFs due to technical nuances related to Grayscale’s SEC case. Nevertheless, CME premiums and emerging activity create a strong market signal supporting continuous strength in Ether.”