Bitwise predicts record capital inflows into Bitcoin ETFs

Spot Bitcoin ETFs in the US will attract record capital inflows in the fourth quarter, Bitwise CIO Matt Hougan predicted.

He expects total flows into Bitcoin-based ETFs to significantly exceed last year's total of $36 billion by the end of 2025.

The expert identified three key drivers of inflows: the approval of cryptocurrency investments by asset managers, the recent rise in the price of digital gold, and the “depreciation trade.”

According to Hougan, major players like Morgan Stanley have begun flexibly incorporating crypto assets into diversified portfolios. Experts recommended zero exposure for conservative investors, while riskier investors should aim for 2-4% of their capital.

Leading financial institutions such as Wells Fargo, UBS, and Merrill Lynch are making similar decisions. The analyst noted that this indicates growing demand for Bitcoin ETFs among professional advisors.

Gold vs. Bitcoin

The top performers this year were cryptocurrency and gold, supporting the relevance of the “depreciation trading” strategy, Hougan said. The US money supply has grown by 44% since 2020, and investors are seeking protection from fiat currency devaluation in these assets.

According to Bitwise's CIO, the surge in Bitcoin's price is also driving new inflows into ETFs. Every quarter that Bitcoin delivered double-digit returns, billions of dollars flowed into ETFs based on the asset.

Bitcoin ETF inflows and quarterly returns of the underlying asset. Source: Bitwise.

Digital gold's recent short-term surge above $125,000 attracted media and investor attention. The analyst believes this suggests a new wave of momentum in the final quarter of the year.

He noted that Bitcoin ETFs have already recorded a total inflow of $3.5 billion in the first four trading days of October. The cumulative total since the beginning of the year has reached $25.9 billion.

Bitcoin ETF net inflows in October. Source: SoSoValue.