Bitcoin (BTC) is on the cusp of a potential breakout, as increasing institutional investment, growing mining holdings and surging exchange-traded product (ETP) flows point to rising demand, according to VanEck’s latest Bitcoin ChainCheck. report.
The report also highlighted that the growing influence of institutional adoption in the Bitcoin market has strengthened the correlation between ETP flows and BTC price.
ETP correlation
Data from the report showed that weekly net inflows into US Bitcoin ETPs reached $19.4 billion in mid-October, with institutional inflows driving much of the price discovery process.
The correlation between weekly ETP inflows and Bitcoin returns was remarkably strong, with an R² value of 0.3422. This indicates that institutional money is increasingly leading rather than following Bitcoin’s price movements. The R² value is an indicator often used to determine how a model fits data and predicts future results.
VanEck head of digital asset research Mathew Sigel said:
“Institutional participation, through these investment vehicles, has a clear impact on the price, strengthening Bitcoin’s position as a key asset in the global financial system.”
The report also shows that daily ETP flows have shown modest predictive power for Bitcoin price changes in after-hours trading, further underscoring the influence of institutional inflows.
VanEck’s analysis found that during specific periods from July to September, the relationship between ETP flows and Bitcoin returns strengthened, demonstrating how momentum is spilling over from the US market to the 24/7 global crypto markets.
Macro hedge
VanEck stated that Bitcoin is increasingly recognized as a “macro hedge” against economic instability and market volatility. The report noted Bitcoin’s growing appeal among institutional investors looking to protect their portfolios from inflation, currency devaluation and geopolitical uncertainty.
Many see Bitcoin as a hedge against traditional fluctuations in the financial markets, similar to gold, but with added benefits such as liquidity and digital accessibility. Recent trends in mining activities and corporate treasury strategies have reinforced this narrative.
The report notes that US-listed miners added 2% to their Bitcoin treasuries in September, following an 11% increase in August. This growing accumulation of BTC, coupled with an 8% rise in corporate bonds, shows robust institutional confidence in Bitcoin’s long-term prospects.
According to Sigel:
“Publicly traded miners and major corporations, including Japanese real estate manager Metaplanet, continue to accumulate Bitcoin, reflecting its rising status as a store of value.”
said Matthew Sigel, Head of Digital Assets Research at VanEck.
Market sentiment and dominance
Market sentiment around Bitcoin has improved significantly, with almost 90% of Bitcoin addresses now making profits. The unrealized profit/loss ratio has increased by 6% over the past month, indicating a more optimistic outlook compared to the summer months.
Furthermore, Bitcoin’s dominance in the crypto market has increased to 57%, reaching levels not seen since April 2021. This increase in market share reinforces Bitcoin’s status as the primary store of value within the crypto ecosystem.
The report also highlighted Bitcoin’s resilience in various regulatory environments, especially as US regulators, including the SEC, increase scrutiny of non-Bitcoin digital assets. Bitcoin, on the other hand, has remained largely insulated from these pressures, reinforcing its role as a safer asset.
In terms of regional trends, US and European traders have been the main drivers of Bitcoin’s price performance, with the asset gaining 2% during US trading hours and 4% during European sessions over the past month.
Meanwhile, the long-standing pattern of Asia selling Bitcoin to US and European buyers remains intact and has been a consistent factor in price movements, with demand from Western markets often offsetting selling pressure from Asian markets.