Last week, Bitcoin exchange-traded products (ETFs) in the United States faced a significant downturn, experiencing $1.2 billion in net outflows.
Data from SoSoValue indicates that this marked their second-largest weekly decline since their inception in January 2024.
This decline interrupted a two-week period of inflows exceeding $5 billion, which many viewed as a sign of growing institutional confidence.
According to SoSoValue, nearly every major issuer saw capital withdrawals. BlackRock’s IBIT reported a $276 million outflow, while Fidelity’s FBTC experienced a $169 million decline.
Other prominent issuers, such as ARK Invest’s ARKB and Bitwise’s BITB, saw reductions of $290 million and $128 million, respectively, with Grayscale’s two funds losing $321 million.
This downturn followed a turbulent week for Bitcoin, which briefly fell below $104,000 during that time—its lowest price point since June.
Experts attributed the drawdown to macroeconomic conditions, particularly tensions from the US-China tariff disputes, which undermined confidence in riskier assets like Bitcoin.
Nonetheless, since then, Bitcoin has made a robust recovery, surpassing $110,000 amidst ongoing market developments.
London’s counteraction
While US markets adjusted defensively, a different narrative was taking shape across the Atlantic that promised to enhance retail access to Bitcoin.
On October 20, Bitcoin exchange-traded notes (ETNs) commenced trading on the London Stock Exchange, signaling the end of the UK’s three-year prohibition on crypto investment products.
BlackRock spearheaded this launch with its iShares Bitcoin ETP, accompanied by other notable issuers such as Bitwise.
Early responses to these products have been mixed, yet they have displayed encouraging signs.
ByteTree founder Charlie Morris noted that initial trading activity indicated “success with platforms like Interactive Investor, Swissquote, and Trading 212,” although some brokers, such as AJ Bell, were slower to offer access.
Meanwhile, Bradley Duke, Bitwise’s head for Europe, suggested that the rollout of these products would represent a significant week for retail investors as “the direction of travel for crypto is clear.”
Projected $600 billion inflow?
With a fresh wave of adoption emerging across the Atlantic and renewed interest from institutional players in Bitcoin, Galaxy Research anticipates that crypto investment products could draw in up to $600 billion in new inflows as traditional financial institutions expand their distribution.
The firm asserts that the US advisory market represents a vast, largely untapped resource that could funnel substantial investments into BTC. It declared:
“Around 300,000 financial advisors oversee nearly $30 trillion in client assets. If a 2% allocation to Bitcoin ETFs materializes across this sector, it could translate to approximately $600 billion in possible inflows.”
This influx could rival the entire global gold ETF market, currently valued at around $472 billion, and quadruple the $146 billion in assets under management (AUM) across US spot Bitcoin funds.
The asset management firm highlighted that recent policy shifts by major traditional financial institutions, such as Morgan Stanley and Vanguard, support this theory.
Specifically, Morgan Stanley recently suggested a potential 4% allocation to digital assets, while Vanguard is reportedly exploring the introduction of select third-party crypto ETFs for its brokerage clients.
These trends are likely to inject new capital into the burgeoning industry and further catalyze Bitcoin’s adoption.
Galaxy Research posited that the full opening of large advisory platforms could signify a structural change in how digital assets are integrated into conventional finance.
Once this access is fully established, financial advisors will be able to incorporate crypto directly into traditional balanced portfolios, transitioning the asset class from retail-driven speculation to advisor-led portfolio management.
It emphasized:
“The repercussions could be considerable. New inflows might follow as wealth managers start allocating to the asset class, potentially elevating total Bitcoin ETF AUM to $500 billion within a few years, assuming just a 1% average allocation across managed portfolios. Such inflows would alter market dynamics and fortify Bitcoin’s status as a mainstream, investable asset.”
Galaxy’s analysis further indicated that this shift could also introduce a more sophisticated form of liquidity.
The firm noted that advisory-driven allocations tend to adhere to longer holding periods and stricter compliance guidelines, which minimize the short-term turnover typically seen in retail crypto trading.
Over time, such discipline could enhance price stability, deepen liquidity, and align Bitcoin more closely with traditional asset classes like equities, bonds, and gold.
