"What Happened to Bitcoin ETF?" Newsletter: ETF Inflows Surge, Rate Cuts Shake Markets, and Why Bitcoin Stands Strong

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Welcome to "What Happened to Bitcoin ETF?”

In this week’s edition, we’re bringing you the key highlights from September 16 (Mon) to September 20 (Fri). Apologies for the missing in sending the newsletter—last week, we’ve been in Singapore for Token2049, attending several side events! We’ll provide a concise and insightful analysis of the Bitcoin ETF market, along with a review of Bitcoin’s overall performance during this period.

Weekly Bitcoin ETF in Numbers

• Total AUM of Bitcoin ETFs (as of September 20):

  $57,397,441,419 (Last week: $54,185,008,487)

  ₿913,519 (Last week: ₿907,341)

• Total Weekly Net Flow (September 16~September 20):

  +$3,212,432,932 (Last week: +$7,612,075,675)

  +₿6,178 (Last week: +₿37,926)

• Top Weekly Performer:

  Fidelity (FBTC): +₿2,227

• Worst Weekly Performer:

  Grayscale (GBTC): -₿446

1/ Total AUM and Bitcoin Price Dynamics:

Bitcoin Spot ETFs recorded significant inflows on September 20, adding $92 million in net inflows, while Ethereum ETFs saw $2.9million—both experiencing no outflows, according to Spot On Chain, a leading on-chain analytics firm.

Seven out of eleven Bitcoin ETFs posted positive inflows, with Fidelity’s FBTC leading the pack, adding $26.1 million, followed by ARK 21Shares ARKB, which recorded $22 million. Other notable inflows included Bitwise BITB with $15.1 million, Grayscale Mini BTC with $13.4 million, and VanEck HODL with $7.1 million. Even Valkyrie BRRR and Invesco BTCO saw inflows of $5.2 million and $3.1 million, respectively.

As of September 20, the total AUM for Bitcoin ETFs reached $57,397,441,419 USD (up from $54,185,008,487 USD the previous week) and ₿913,519 Bitcoin (compared to ₿907,341 the previous week).

This brings total weekly inflows for Bitcoin ETFs to a remarkable $397 million, reflecting inflows on four out of five trading days. The broader market sentiment remains positive, indicating strong investor interest in Bitcoin ETFs, despite recent outflows earlier in the week.

Bitcoin Price Dynamics: Following the FOMC rate decision to cut interest rates by 50 basis points, Bitcoin’s price surged 4.42%, reaching $62,605. This rise was largely driven by increased investor confidence in the Federal Reserve’s optimistic outlook for economic stability. The broader crypto market also saw gains, with Ether rising 4.14% and Solana jumping 6.21%, reflecting renewed appetite for risk assets.

2/ Bitcoin ETF Weekly Flow:

Ending Holdings on September 20 (Weekly Change):

• IBIT (BlackRock): 357,550 BTC (+273 BTC)

• GBTC (Grayscale): 221,640 BTC (-446 BTC)

• FBTC (Fidelity): 177,065 BTC (+2,227 BTC)

• ARKB (Ark 21Shares): 46,604 BTC (+1,597 BTC)

• BITB (Bitwise): 38,313 BTC (+1,090 BTC)

• BTC (Grayscale Mini): 33,319 BTC (+243 BTC)

• HODL (VanEck): 11,369 BTC (+509 BTC)

• BRRR (Valkyrie): 8,863 BTC (+82 BTC)

• BTCO (Invesco Galaxy): 7,926 BTC (+202 BTC)

• EZBC (Franklin Templeton): 7,017 BTC (+348 BTC)

• BTCW (WisdomTree): 3,708 BTC (+54 BTC)

• DEFI (Hashdex): 144 BTC (+0 BTC)

Total: 913,519 BTC (+6,178 BTC)

3/ Looking Ahead:

The Fed’s Rate Cut and Bitcoin’s Trajectory

The Federal Reserve’s recent 50 basis point (bps) rate cut—double the anticipated 25 bps—brings the federal funds rate down to 4.75% to 5%, signaling heightened concerns about the U.S. economy. This aggressive cut reflects growing anxiety about recessionary forces, stagnant job growth, and structural weaknesses in the financial system. As a result, both opportunities and risks are now in play for Bitcoin.

Short-Term Volatility or Opportunity?

Historically, rate cuts have been positive for hard assets like Bitcoin, as they lead to inflationary pressures that drive capital into stores of value. However, this rate cut feels more like a borderline emergency response to mounting economic instability, rather than a typical easing move. If markets interpret this cut as a sign of deeper economic trouble, Bitcoin could be caught in a risk-off selloff, leading to near-term volatility.

While Bitcoin reached highs of $65,000 in August, its subsequent dip below $59,000 underscores market uncertainty. The Fed’s aggressive stance could introduce even more turbulence for Bitcoin in the coming weeks as investors reassess the broader economic outlook.

Navigating Global Economic Instability

This rate cut also comes against a backdrop of global economic instability. The U.S. labor market is showing signs of strain, with rising unemployment and slower job growth. Similarly, Europe, Japan, and China are grappling with stagnation, inflation, and declining industrial output. The Fed’s cut is not just about U.S. risks—it is part of a global response to economic headwinds, which could affect all asset markets, including Bitcoin.

Bitcoin’s Role in a Changing Financial Landscape

In the long term, Bitcoin’s role as a hedge against fiat currency debasement remains compelling. Central banks globally are increasingly reliant on monetary expansion—through rate cuts, quantitative easing, and other liquidity injections—to sustain growth. As such, Bitcoin’s value proposition as an independent, decentralized financial network strengthens. While short-term turbulence is likely, Bitcoin’s long-term fundamentals continue to solidify, especially as central banks resort to repeated intervention.

Key Takeaway: Short-Term Volatility, Long-Term Strength

In the near term, expect Bitcoin volatility as markets digest the implications of the Fed’s decision. However, for investors who view Bitcoin as a sound money system, last week’s rate cut is yet another step in validating its long-term value. As the global financial system becomes more dependent on monetary intervention, Bitcoin’s appeal as a hedge against mismanagement will only grow.

The historical Bitcoin market cycles illustrated in the attached chart suggest that Bitcoin’s most explosive price action tends to occur post-halving, aligning with significant bullish runs every four years. With 2025 potentially marking the next peak in Bitcoin’s cycle, many analysts believe that the current consolidation phase is merely a prelude to another substantial rally. Given this predictable cycle pattern, combined with increasing institutional interest and macroeconomic factors, the next Bitcoin bull run is likely yet to come, reinforcing Bitcoin’s long-term upward trajectory.

4/ 🔥What’s Trending Now?:

SEC Greenlights Bitcoin ETF Options

In a significant development for the Bitcoin market, the SEC has approved Nasdaq to list options on the iShares Bitcoin Trust ETF (IBIT), marking a major step forward for regulated Bitcoin derivatives. This approval, a key hurdle in expanding the Bitcoin ETF landscape, sets the stage for more institutional participation in the market, with other exchanges also lining up to list options on IBIT and other spot-Bitcoin ETFs.

As Bloomberg Intelligence ETF analyst Eric Balchunas noted, this could be a game-changer: “Getting the SEC to come around is a big step toward listing options, which can help attract more and larger investors, as well as bring more liquidity to the ETFs.” Since its launch in January, IBIT has accumulated around $22.7 billion in assets, making it the largest ETF investing directly in Bitcoin.

Will ETF Options Reduce Volatility?

While the approval is a major milestone, some industry voices are skeptical about its impact on Bitcoin’s notorious volatility. Jeff Park, head of alpha strategies at Bitwise Asset Management, believes that while ETF options offer more leverage and exposure to Bitcoin, they won’t necessarily stabilize prices. According to Park, Bitcoin’s hard-capped supply at 21 million means it lacks the price stability mechanisms present in traditional fiat markets, where central banks can manipulate money supply to control volatility.

However, Park calls the approval of Bitcoin ETF options a “monumental advancement” for the market, noting that this is the first time a financial product has introduced regulated leverage to a commodity with a constrained supply. He emphasizes that while options traders might not reduce volatility, they could capture more value from price movements, amplifying their potential returns without creating “fake supply.”

The Bigger Picture: A New Era for Bitcoin Derivatives

The launch of Bitcoin ETF options is set to introduce a new layer of financial complexity and utility to the crypto market. According to Willy Woo, an on-chain analyst, synthetic exposure from derivatives has long been a topic of debate. Some argue that this could dilute Bitcoin’s scarcity. However, Park counters that options merely help Bitcoin reach its neutral price faster, which he believes will be higher in the long term.

As Bitcoin’s price tends to move with its implied volatility, the introduction of options could lead to heightened market dynamics, including potential gamma squeezes that drive explosive price rallies.

With Bitcoin’s total notional exposure expected to grow exponentially, this new era of derivatives could drive more participation from traders looking to leverage the unique dynamics of Bitcoin as a supply-constrained asset, potentially pushing prices even higher in the long run.

5/ This Week’s Bitcoin Mindset:

1. The Ultimate Shortcut: Why Letting Go of Altcoins and Holding Bitcoin is Your Best Move

2. The Bitcoin Strategy Flex: MicroStrategy Crushes 100% of the S&P 500 with a 1,071% Gain 🚀 #BitcoinWins

3. Spot the Ponzi: One’s Unlimited and Centralized, the Other is Bitcoin. Which Would You Trust?

🍫BITCOIN CRUMBS ON THE TRAIL 🍫

Dive into this week's crunchy bites of important news, serving up the freshest updates and insights from the Bitcoin world.

Here's what's on the menu:

1. A ‘Huge’ BlackRock Bitcoin ETF Price ‘Surprise’ Is Suddenly About To Hit

   The world's largest asset manager BlackRock has warned "growing concerns" around the spiraling $35 trillion U.S. debt pile that's predicted...

2. The Bitcoin bros who want to crowdfund a new country

   How a group of Silicon Valley tech entrepreneurs plan to create "the network state."

3. Bitcoin Whales Take Profit After Latest Price Jump — Here’s How Much They Sold

   The latest on-chain data shows that a particular class of Bitcoin investors has been selling for profit in the wake of the recent price...

4. MicroStrategy Raises $1 Billion to Buy Bitcoin, Redeem Notes

   MicroStrategy Inc. said it raised $1.01 billion through the sale of convertible senior notes to purchase more Bitcoin and redeem higher...

5. The ‘Future Of Humanity’—Elon Musk Reveals Details Of Secret Meeting With El Salvador’s Bitcoin President Amid Price Rally

   Elon Musk, the Tesla billionaire who is one of the biggest bitcoin and crypto price influencers, has shared details of his secret meeting...

That’s it for today; stay tuned for more updates and insights in our next edition!

Stay charged,

SmashFi Team

P.S. - Follow me on X (@brianhoonjong) for daily doses of insightful updates on Bitcoin ETFs and beyond! 🚀🐦

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Disclaimer: This newsletter is for the brainy and the brave. It's for informational purposes only and not a substitute for investment advice. Always do your own research.