Mike Smith
8 hours ago
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The crypto market loves the domino effect, and this fall seems to be preparing the loudest sound of falling knuckles. Crypto asset manager Bitwise estimates that inflows into Bitcoin-based funds could rewrite history by Christmas. A year ago, the first calendar cycle of ETFs attracted a whopping $36 billion, but now the bar has been raised higher - analysts see the potential to surpass it thanks to three interrelated factors.
First, it's as if the institutional giants have opened the floodgates. When Morgan Stanley authorized 16,000 of its advisors to offer cryptocurrency allocations, the market heard the distinct click of the starting gun. Wells Fargo stepped in behind it, with UBS and Merrill Lynch already looming on the horizon. Huge capital, which was previously treading on the doorstep, has finally found a legitimate door to the crypto arena.
The second demand engine is the so-called “debasement trade”. The U.S. money supply has soared 44% since 2020, and investors are tired of holding their savings in ever eroding dollars. They're turning to assets with built-in supply constraints - gold and, of course, the premier digital coin. Bitcoin broke through the psychological $100,000 mark and held above $125,000 in early October, fueling a thirst for new positions.
Finally, a classic feedback loop. Historically, sharp price spikes have led to a surge in ETF orders, as many find it easier to hit the buy button on an exchange-traded fund than to fiddle with their wallets. Already in the first four trading days of October, net inflows totaled $3.5 billion, bringing the year's cumulative total to $25.9 billion. If the momentum continues, the fourth quarter will easily overtake the record and cement its status as the most successful chapter for institutional participation.
Interestingly, Bitwise is seeing not only a quantitative shift, but also a qualitative one. Previously, ETF flows were primarily generated by retail investors, but now they are being led by advisor-managed capital focused on long-term diversification of portfolios. This changes the structure of demand and, according to the report's authors, reduces the likelihood of sharp outflows at the slightest volatility.
The synergy of fresh easy access, macroeconomic fears and price momentum creates a rare three pillar structure for Bitcoin. Any one of them individually is already pushing capital toward the cryptocurrency; together, they resemble a compressed spring ready to unwind in the fourth quarter. If Bitwise's forecast comes to fruition, the flagship will receive new liquidity, and the dominoes of the bull rally will swing further, leaving the skeptics behind.
