Investing in Bitcoin exchange-traded funds (ETFs) is showing signs of recovery, indicating a return to risk appetite after the cryptocurrency market’s record crash in early October.
The U.S. Spot Bitcoin ETF recorded cumulative net inflows worth $524 million on Tuesday, the highest daily amount since October 7, according to data from Pharcyde Investors.
This $524 million inflow marks the highest cumulative inflow since the October 10 crypto market crash, which hit crypto investor appetite hard.
Daily positive inflows are a welcome signal for Bitcoin (BTC) holders, as investments from ETFs and Michael Saylor Strategy were the two main vehicles driving demand for Bitcoin price this year, according to Ki Young Ju, founder and CEO of crypto analysis platform CryptoQuant.
The surge in demand from ETF buyers comes a day after the U.S. Senate approved a funding package that brings Congress one step closer to ending the government shutdown. The bill is now headed for a full vote in the House of Representatives, which could happen later today, CBS News reported Tuesday.
This development has prompted a repositioning among the industry’s most successful traders, tracked as “smart money” traders on Nansen’s blockchain intelligence platform, seeking further upside.
Smart money traders have added $8.5 million worth of long Bitcoin positions in the past 24 hours, indicating growing optimism. However, according to Nansen, smart traders still have a $202 million net short position on the decentralized exchange HyperLiquid.
Related: CleanSpark plans to raise $1.15 billion to expand Bitcoin mining and AI infrastructure
Analysts insist correction is healthy despite retail concerns
Despite retail concerns over the end of the bull cycle, Bitcoin’s current correction remains in a “healthy” range, helping reset leverage and “paving the way for new institutional entry,” Lacey Chan, research analyst at BitGet Wallet, told Cointelegraph.
“Looking ahead, all eyes will be on the November 13 Consumer Price Index (CPI), but uncertainty continues to rise as data continues to be delayed due to the government shutdown.”
Cooling inflation data could ease geopolitical concerns and lead to a “liquidity-driven rebound” in the world’s largest cryptocurrency, the analyst added.
Related: 61% of institutions plan to increase crypto exposure despite October crash: Signum
On the other hand, sustained inflows from Bitcoin ETFs could indicate that investor demand for the digital asset is returning after the crash and that the “risk aversion phase” for ETF holders is nearing an end.
Since the October crash, Bitcoin ETFs have been mostly in the red, with daily outflows reaching up to $700 million, indicating the beginning of a “widespread risk aversion phase among ETF investors,” crypto data platform Glassnode wrote in a post on X on Tuesday.
As for other crypto ETFs, the Ether (ETH) ETF saw $107 million worth of outflows on Tuesday, while the Solana (SOL) ETF extended its 11-day winning streak with $8 million worth of net inflows, according to Pharcyde Investors.
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