Bitwise "Q4 Bitcoin ETF inflows expected to be the largest on record"

U.S. cryptocurrency manager Bitwise said it expects a record amount of money to flow into spot Bitcoin (BTC) exchange-traded funds (ETFs) in the fourth quarter. It analyzed that it is highly likely to surpass last year's inflows (36 billion dollars) by year-end.

On the 8th (local time), Matt Hougan (CIO of Bitwise) said in a memo, "Spot Bitcoin ETFs have seen 22.5 billion dollars flow in through the third quarter, but I expect a new record in the fourth quarter," and "total inflows will exceed 36 billion dollars by year-end."

Bitwise cited three factors driving the Q4 rally: ▲official allowance of cryptocurrency inclusion by asset managers ▲a sharp rise in the price of Bitcoin ▲the spread of the 'debasement trade(debasement trade)' as a hedge against currency depreciation.

Recently, Morgan Stanley established limits for cryptocurrency allocations within multi-asset portfolios, recommending a 0% allocation for conservative investors and 2~4% for high-risk-preferring investors. Wells Fargo also allowed investment in Bitcoin ETFs, and UBS and Merrill Lynch are expected to follow. Hougan said, "Discussions with advisors have revealed significant potential demand," and "the real inflows are just beginning."

He added, "With U.S. money supply (M2) having increased 44% since 2020, investors are favoring gold and Bitcoin as hedges against currency depreciation." Recently, JP Morgan also defined the same phenomenon as the 'debasement trade' and mentioned it as a mainstream investment strategy.

This year, Bitcoin and gold are recording the highest returns among major assets. Bitcoin surpassed 125,000 dollars in early October to reach an all-time high, and after some correction is trading around 122,700 dollars. Bitwise said, "Whenever Bitcoin posts double-digit quarterly gains, the inflows into ETFs have also amounted to billions of dollars," and "the same pattern will repeat in Q4."

Hougan said, "Already 3.5 billion dollars have net flowed in during the first four days of this quarter, and year-to-date cumulative inflows are 25.9 billion dollars," adding, "it is highly likely that more than 10 billion dollars will be additionally invested during the remaining 64 days."