Bitcoin Inflows into BlackRock’s IBIT Reach Nearly $1 Billion, Ranking as the Second-Largest Since Its Inception.

CME Bitcoin Futures Open Interest Continues to Decline, While BlackRock’s Bitcoin ETF Sees Record Inflows

Open interest on CME Bitcoin Futures has declined for the fourth consecutive day, according to the latest data from the CME, reflecting a reduction in overall market leverage.

Meanwhile, BlackRock’s iShares Bitcoin (BTC) Trust ETF (IBIT) saw a remarkable influx of $970.9 million, marking the second-largest net inflow since its launch in January 2024, based on data from Farside. Of this, $591.2 million was added on Monday alone, as funds flowed out of rival Bitcoin ETFs: Fidelity’s FBTC lost $86.9 million, Bitwise’s BITB experienced a drop of $21.1 million, and ARK’s ARKB saw $226.3 million in outflows.

This uptick in inflows comes as Bitcoin surged 7.2% over the last week, now trading at $94,900. Since April 22, IBIT has accumulated over $4.5 billion in net inflows, countering the prevailing market trends.

Experts are taking note of this growth in the Bitcoin ETF sector. Nate Geraci, President of The ETF Store, tweeted:
“Nearly $1 billion into the iShares Bitcoin ETF today. This is the second-largest inflow since its launch in January 2024. Remember when the consensus was that there was ‘no demand’?”

Eric Balchunas, Senior ETF Analyst at Bloomberg, commented:
“ETFs are moving ahead in two-steps-forward mode after a brief step back, following the exact pattern we had anticipated.”

In the derivatives market, CME Bitcoin Futures open interest has fallen to 132,750 BTC after four days of consecutive declines. This suggests a slow-down in futures market participation, though this trend may be reversing.

The basis yield has risen from 5% to 9% in April, according to Velo data, which could lead to a resurgence in futures activity and a short-term recovery in open interest as traders seek profitable basis trades.

Why it matters:
A basis trade involves purchasing spot Bitcoin while simultaneously shorting Bitcoin futures to profit from the price difference between the two. When the yield is higher, demand for futures increases, driving up open interest. Conversely, a decrease in the yield causes futures demand to wane, reducing open interest and indicating a drop in market leverage.