During this past week, the Bitcoin ETF market experienced an unprecedented surge, with inflows of $555.9 million, the highest figure since July of that year. This growth was led by notable names such as Fidelity’s Wise Origin Bitcoin Fund, which attracted $239.3 million in a single day, and the Bitwise Bitcoin ETF Trust, which saw inflows of $100.2 million. BlackRock’s iShares Bitcoin Trust also saw significant performance, with daily inflows of $79.5 million and over $1 billion during the week.
The increase in inflows coincides with the rise in Bitcoin’s price, which hit $67,690 by mid-October. Growth in assets under management (AUM) from these ETFs reached $63.8 billion, a new all-time high. According to analyst Rachael Lucas, low global interest rates are driving investors towards alternative assets such as Bitcoin.
But in the DeFi world, how is this being reflected?
Especially on the fees side, there seems to be a stalled market.
In the last month, in fact, the commissions generated by DeFi protocols fell to $218 million, marking an annual low and down from $486 million in March. This figure suggests a possible shift of interest towards other crypto sectors, such as memecoins (more on that in this in-depth article).
An example of difficulties in the sector is the launch of World Liberty Financial, backed by former President Trump, which raised ‘only’ $13.2m out of a target of $300m. The project aims to launch a DeFi lending platform on Scroll, an Ethereum Layer 2 network. Despite the general decline, established protocols such as Lido, Uniswap and Aave (the historical ones, to be clear) continue to maintain significant fee streams, signalling that core DeFi services maintain user interest.
But there is an important signal to keep in mind about Bitcoin’s movements that perhaps not everyone has noticed:
14 October was marked by short liquidations of over $205 million on the major exchanges, the highest figure in two months. Bitcoin’s rising price helped keep up the pressure on short sellers, driving BTC to weekly gains of 8%. This bearish movement reversed the downward trend that had characterised early October, historically a favourable month for Bitcoin.
And just in case, the Chicago Mercantile Exchange (CME) saw a record high in open interest on Bitcoin futures, reaching $12.26 billion on 18 October 2024. Open interest (OI) represents the sum of futures contracts not yet settled and its growth highlights the increase in institutional positions on BTC. This trend suggests growing confidence by institutional investors in the continued growth or volatility of Bitcoin prices.
In short, as in a clever chess move, everyone is playing their own game predicting imminent market movements. What will the direction be?
