The cryptocurrency landscape witnessed a significant revival over the week ending January 16, as spot Bitcoin exchange-traded funds (ETFs) garnered $1.42 billion in net inflows. This impressive figure represents the strongest performance for Bitcoin ETFs since early October.
The standout day was Wednesday, which recorded an astonishing single-day inflow of approximately $844 million, closely followed by another big day on Tuesday with $754 million. However, the momentum faced a slight setback on Friday, resulting in $395 million in outflows. Despite this dip, the cumulative weekly inflow indicates a robust interest from institutional investors, reversing $680.9 million of the previous week’s outflows.
The iShares Bitcoin Trust led the charge with $1.04 billion in inflows, while Fidelity’s Wise Origin Bitcoin Fund contributed $194.4 million. Across nine ETF issuers, only the Grayscale Bitcoin Trust reported modest outflows of $1.6 million.
This surge in demand has energized Bitcoin, pushing its price above $95,000 midweek and reaching a January 14 high of $97,900—the highest value observed since December 4.
Supply Dynamics: A Shift Towards Stability
Onchain data highlights a significant shift in Bitcoin’s market dynamics, as large holders, commonly referred to as “whales,” have reduced their selling pressure compared to late December. Vincent Liu, Chief Investment Officer at Kronos Research, explains that the stabilized distribution among whales, coupled with the absorption driven by ETFs, may result in a tighter effective supply. This shift paints a more optimistic picture for Bitcoin’s near-term trajectory.
Liu characterizes the current market phase as an early indication rather than a full confirmation of bullish conditions. Nevertheless, the combination of renewed inflows and decreased selling suggests a more sustainable institutional interest in Bitcoin is emerging.
Open Interest on the Rise
Another encouraging sign comes from Bitcoin’s open interest, which surged by 20.8% year-to-date, reaching $36.5 billion. This increase reflects new capital entering long positions in the market. Market intelligence platform Santiment observed a curious shift in social media sentiment, which has turned bearish amidst rising prices, leading analysts to suggest that this contrarian sentiment could play a pivotal role in propelling Bitcoin beyond the psychologically significant $100,000 mark.
Market Sentiment and Trading Conditions
The Bitcoin Fear & Greed Index made a notable jump from 29 (indicating fear) to 49 (neutral) throughout the week, peaking at 50 on January 17 before retracting slightly. Such movements illustrate improved market sentiment, although experts suggest that Bitcoin requires several successive weeks of strong ETF inflows to instigate a more significant trend change in its price trajectory.
Ethereum also enjoyed enhanced ETF interest during the week, with the largest daily inflows peaking at around $290 million on Tuesday and $215 million on Wednesday. Despite some outflows on Friday totaling approximately $180 million, Ethereum ETFs closed the week with impressive gains of $479 million.
Overall, Bitcoin continued to trade above its 50-day Exponential Moving Average, signaling bullish sentiments in the near term, even as it remains below the 200-day EMA, suggesting a mixed long-term technical outlook. As institutional interest revitalizes, all eyes are on Bitcoin’s capacity to sustain this momentum and possibly embark on a new bullish phase.
