Cryptocurrency ETF Weekly | Last week, the net inflow into Bitcoin spot ETFs in the U.S. was nearly $1 billion, and mainstream financial institutions in Japan support the launch of Bitcoin and Ethereum ETFs

*Organizer: Fairy, * ChainCatcher

Performance of Cryptocurrency Spot ETFs Last Week

From October 21 to October 24, the global Bitcoin spot ETF holdings showed an overall upward trend, increasing by 9,225 Bitcoins. ETFs in the U.S. (excluding Grayscale) and Canada were in a state of accumulation, increasing their holdings by 9,587 and 14 Bitcoins, respectively. In contrast, Canada's holdings decreased by 269 Bitcoins, exceeding Grayscale's reduction of 56 Bitcoins.

Data from @Phyrex_Ni

U.S. Bitcoin Spot ETF Net Inflow of $997.6 Million

Last week, U.S. Bitcoin spot ETFs continued to see a trend of capital inflow, with a net inflow of $997.6 million, bringing the total net asset value to $65.25 billion. This inflow primarily came from BlackRock's IBIT, which had a net inflow of $1.147 billion.

Three Bitcoin spot ETFs experienced net outflows last week:

• Bitwise BITB had a net outflow of $15.2 million, with a net asset value of $2.78 billion;
• Grayscale GBTC had a net outflow of $11.9 million, with a net asset value of $14.72 billion;
• ARK 21Shares' ARKB had a net outflow of $206.4 million, with a net asset value of $3.29 billion.

According to data from Dune, the total on-chain holdings of U.S. spot Bitcoin ETFs have surpassed 1 million BTC, currently around 1.04 million BTC, accounting for 5.27% of the current BTC supply.

Source: Farside Investors

U.S. Ethereum Spot ETF Net Outflow of $24.6 Million

Last week, the U.S. Ethereum spot ETF shifted from a net inflow to a net outflow, with an overall net outflow of $24.6 million. The outflow came from Grayscale ETHE, which had a net outflow of $56.4 million. Meanwhile, BlackRock's ETHA recorded a net inflow of $19.1 million, while the capital flow of other ETFs remained relatively stable with smaller inflows.

Additionally, Bitwise's ETHW, Franklin's EZET, and Grayscale's Ethereum Mini Trust ETH did not experience any capital flow.

Source: Farside Investors

Hong Kong Bitcoin Spot ETF Net Outflow of 40.32 Bitcoins

Last week, the Hong Kong Bitcoin spot ETF had a net outflow of 40.32 Bitcoins, with a total net asset value of $28.6 million. The total amount of Bitcoin held by the ETF issuer, Huaxia, reached 2,210 Bitcoins, while the holdings of Harvest further decreased to 437 Bitcoins.

The Ethereum spot ETF did not experience any capital flow, with a total net asset value of $3.82 million. On October 25, the Ethereum spot ETF's single-day trading volume reached $1.77 million, setting a new high since August 5.

Data: SoSoValue

Overview of Cryptocurrency ETF Dynamics Last Week

Japanese Mainstream Financial Institutions Prioritize Bitcoin and Ethereum ETF Launches

Some major institutions in Japan have stated that discussions regarding cryptocurrency exchange-traded funds (ETFs) should prioritize mainstream tokens such as Bitcoin and Ethereum. Previously, Japan was considering whether to follow international trends and allow these cryptocurrency investment tools into the market.

Institutions participating in this discussion include Mitsubishi UFJ, Sumitomo Mitsui, and other major trust banks, bitFlyer and other cryptocurrency exchanges, as well as Nomura Securities and SBI Securities. In a proposal released on Friday, they noted that due to the significant market value and "stable performance record" of Bitcoin and Ethereum, these cryptocurrencies are suitable for investors to accumulate assets in the medium to long term. Additionally, the proposal called for a review of the tax system, suggesting separate taxation on cryptocurrency gains.

An official from Japan's Financial Services Agency stated last month that the agency is reviewing its cryptocurrency regulatory policies, which could provide an opportunity to attract more investment and reduce tax burdens. However, the official also pointed out that this review has not yet reached a final conclusion and may take time to complete. Currently, Japan's tax rate on cryptocurrency gains can be as high as 55%.

Views and Analysis on Cryptocurrency ETFs

Binance's Latest Report: 80% of Bitcoin ETF Demand Comes from Retail Investors

A new report from Binance states that since the launch of the spot Bitcoin ETF, most of the demand has come from retail investors rather than institutional investors. Binance analysts noted that as of October 10, non-institutional investors accounted for nearly 80% of the total assets under management (AUM) of spot BTC ETFs.

Furthermore, since its launch in January, a significant portion of the $63.3 billion in managed assets accumulated by the spot Bitcoin ETF may not necessarily represent new investments in the cryptocurrency sector.

Bloomberg Analyst: Traditional Financial Institutions Interested in Bitcoin ETFs, Helping Improve Capital Flow and Demand

Data shows that over the past four years, among the 1,800 ETFs that began trading, BlackRock's IBIT has seen the highest capital inflow. Bloomberg ETF analyst James Seyffart believes that the rapid influx of capital is partly due to investors wanting to invest in Bitcoin for some time but lacking a safe or simple investment method before the ETF was approved. Now that ETFs are starting to trade, this demand is quickly entering the market.

He stated, "I think this is partly pent-up demand, but as people learn more, it is also new demand. Traditional financial institutions are also interested in these products—including hedge funds participating in futures trading. This helps improve flow and demand." He added that hedge funds have been going long on ETFs and then selling futures contracts.

Meanwhile, the performance of Ethereum spot ETFs has been underwhelming. Farside data shows that so far, nine ETFs have accumulated a net outflow of $491.9 million. However, this does not mean that demand will not rebound. Investors have poured cash into other products, which may indicate that a turnaround is imminent.

Seyffart added, "It's just that the outflow from Grayscale ETHE has overwhelmed the inflows of other (Ethereum) ETFs at the moment."

Opinion: If Harris is Elected, Approval of XRP, SOL, and Other Cryptocurrency ETFs is Unlikely

Two ETF experts stated that if Democratic presidential candidate Harris wins the election in November, applications for XRP and SOL ETFs may not yield results. Bloomberg senior ETF analyst Eric Balchunas stated, "If Harris wins, it won't be approved regardless of who the issuer is." Some industry experts believe that the entry of asset management giant BlackRock into the competition to launch Bitcoin and Ethereum ETFs significantly increases the chances of SEC approval for them—though it remains unclear how much influence BlackRock actually has.

Balchunas stated that if former President Trump wins the election, there will be a "fairly good chance" of more cryptocurrency ETFs emerging, regardless of whether BlackRock joins Bitwise, VanEck, and other companies looking to expand cryptocurrency ETFs beyond BTC and ETH.

The ETF Store president Nate Geraci agreed, stating, "The Harris administration seems unlikely to approve additional spot cryptocurrency ETFs, at least not shortly after the election."

Fox Reporter: Litecoin Founder Optimistic About LTC ETF Application

Fox Business reporter Eleanor Terrett revealed that Litecoin (LTC) founder Charlie Lee expressed optimism about the Litecoin ETF application during an interview with Fox Business Channel, stating, "I am glad to see Canary Capital submit the Litecoin ETF application. We are indeed seeing a lot of institutional demand for Litecoin. The daily growth of Grayscale's Litecoin Trust clearly shows institutional demand, with its price currently more than twice the net asset value. Given that Litecoin is a commodity very similar to Bitcoin, I hope to see the Litecoin ETF approved soon."