Bitcoin ETFs’ Impressive Performance Could Attract $150 Billion Annually

Bitcoin’s value demonstrated a notable rebound in January, bolstered by significant inflows from institutional investors. In the first two days of trading in 2026, the U.S. spot ETFs saw inflows reach an impressive $1.2 billion. Bloomberg ETF analyst Eric Balchunas highlighted that the renewed interest could translate into annual inflows of around $150 billion, describing the inflows as ‘lion-like.’ He remarked, “I told you all, if they can take in $22 billion when it’s raining, just imagine how it will be when the sun is shining.”

Key Takeaways

Bitcoin's recovery in January included significant institutional inflows, with ETFs attracting $1.2 billion in their first two days of trading.
Analyst predictions suggest potential annual inflows of $150 billion into Bitcoin ETFs.
There was a notable drop in net inflows on January 6, prompting questions about the sustainability of this trend.
ETF inflows may enhance Bitcoin's prices if they remain steady and do not lead to increased leveraged bets.
Overall Bitcoin demand is currently low, influenced by retail investors and institutional sentiment alongside ETF activity.

Bitcoin ETFs

Bitcoin ETFs
Source: Bloomberg

On January 2 and 5, the ETFs experienced total daily net inflows of $471 million and $697 million, respectively. However, things took a turn on January 6, when the ETFs recorded a net outflow of $243 million, coinciding with Bitcoin’s price stabilizing at $94,000 after its early bounce. The question remains: will ETF inflows create ongoing momentum to propel BTC higher?

Could Consistent Inflows Boost BTC Prices?

It’s important to note that some analysts identified outflows from late 2025 as connected to hedge fund strategies that were unwinding. In particular, this involved hedges actively targeting the basis trade. A clear indicator of this was the reduction in leverage on the Chicago Mercantile Exchange (CME), as the yield for basis trades decreased from over 10% to 5%.

Nonetheless, analyst James Van Straten pointed out that the early 2026 inflows did not lead to a notable increase in CME’s Open Interest (OI). This suggests that the current investment behavior implies long-term confidence, rather than speculative, zero-sum trades by hedge funds. Van Straten stated, “BTC price continues to make higher highs without OI rebuilding, indicating that exposure is held unhedged and flows are directionally long, not driven by arbitrage.”

Currently, CME’s OI remains subdued, around $10 billion, compared to highs of $19 billion to $20 billion recorded in 2025.

Bitcoin ETFs
Source: Velo

In essence, if ETF inflows maintain their momentum without dramatic increases in leveraged positions through CME, a positive recovery could be on the horizon, particularly above the $94,000 resistance level.

General BTC Demand Remains Sluggish

However, it’s critical to acknowledge that ETFs represent only one aspect of BTC demand. Other contributors, including retail investors and BTC treasury firms, also play a significant role. Together, they affect Bitcoin’s price in conjunction with market sentiment.

Despite the uptick in institutional inflows, overall BTC demand has remained low, as indicated by data from CryptoQuant.

Bitcoin ETF
Source: CryptoQuant

For a more substantial and reliable BTC recovery to occur, a shift towards positive apparent demand is necessary. Meanwhile, Bitcoin’s price faced resistance within the $94K-$96K range (marked in red), which has presented challenges for buyers since late November. Clearing this hurdle is essential for a potential surge towards the psychological $100K mark.

Bitcoin ETFs
Source: BTC/USDT, TradingView

Final Thoughts

The potential for Bitcoin ETFs to drive significant inflows raises optimism in the market, but the correlation with overall demand and market dynamics will determine the future price trajectory. A sustainable recovery hinges on positive demand trends moving forward.