Bitcoin ETFs Could Attract $3B in Q2 Inflows Despite Price Slump, Analysts Say
Despite muted price action and a challenging macroeconomic backdrop, spot bitcoin ETFs recorded more than $1 billion in net inflows during Q1. Analysts now believe inflows could accelerate in the coming months—even if prices don’t recover.
“Even if current market conditions persist, we’re seeing growing momentum from financial advisors and institutional investors,” said Juan Leon, senior investment strategist at Bitwise, which manages the BITB ETF. “Retail sentiment remains muted due to the price decline, but professionals are focusing on bitcoin’s expanding global acceptance, especially in light of the Trump administration’s embrace of the asset.”
Bitcoin declined 13% in Q1, while the S&P 500 posted its worst quarterly performance since 2022. Still, spot bitcoin ETFs attracted steady inflows, signaling interest beyond short-term price movement.
Leon projects that second-quarter inflows could surpass $3 billion, driven by the rollout of wirehouse platform access and anticipated legislative progress.
Arbitrage or Real Demand?
While the first quarter’s $1 billion in inflows was impressive, some of it may have been driven by arbitrage strategies rather than directional bets on bitcoin. Known as the “basis trade,” this involves buying spot bitcoin ETFs while shorting bitcoin futures on the CME—capitalizing on yield without taking on price risk.
This trade was highly profitable in late 2024, with yields in the double digits, but has since cooled to around 5%. That drop could reduce the arbitrage-driven demand for spot ETFs going forward.
Institutions Just Getting Started
Still, many believe institutional adoption is just beginning. “Advisors and institutional allocators are only in the early stages of incorporating spot bitcoin ETFs into portfolios,” said Nate Geraci, president of The ETF Store. “As they grow more comfortable, this should act as a powerful tailwind for continued inflows.”
While retail investors still represent the bulk of bitcoin ETF ownership, that balance could begin to shift. BlackRock CEO Larry Fink, whose IBIT fund leads in assets under management, recently noted the potential for significant institutional involvement as regulatory clarity improves and the U.S. government explores its own exposure to bitcoin.
At a recent ETF conference in Las Vegas, 57% of surveyed financial advisors said they plan to increase allocations to crypto ETFs in 2025, with many noting that reputational risk around crypto has diminished.
A “Digital Gold” Narrative in a Shaky Economy
Mounting concerns over economic instability could also boost bitcoin’s appeal. “If expectations for rate cuts continue or recession fears deepen, bitcoin’s positioning as ‘digital gold’ could attract even more inflows,” said David Siemer, CEO of Wave Digital Assets.
While some short-term investors may exit amid volatility, long-term institutional interest appears poised to grow steadily throughout the year.
