Bitcoin spot exchange-traded funds are rapidly increasing their holdings of BTC, with projections indicating that they could surpass 1.5 million BTC by the end of the year. This data, tracked by WalletPilot, shows that U.S. spot ETFs currently hold around 1.296 million BTC, which is approximately 6.5% of the total circulating supply. Over the past month, there has been a net addition of about 17,393 BTC across all funds, suggesting a potential total of 1.5 million BTC by December if this trend continues.
The largest share of BTC holdings is held by BlackRock’s iShares Bitcoin Trust, which manages approximately 744,500 BTC, representing 3.3% of the total Bitcoin supply. With an average monthly addition of 4,300 BTC in recent months, the iShares Bitcoin Trust could add around 130,000 BTC to its reserves by the end of the year if inflows remain steady.
The accumulation of BTC by ETFs has coincided with Bitcoin reaching record highs of around $124,000, driven by expectations of interest rate cuts by the Federal Reserve. These funds have attracted over $50 billion in assets under management in just over a year, outpacing new Bitcoin issuance from mining, which currently stands at around 450 BTC per day post the April 2024 halving.
In a scenario where inflows remain steady, ETFs could add approximately 70,000 BTC to their holdings by the end of the year. If inflows were to accelerate, reaching around 34,000 BTC per month, ETF reserves could exceed 1.6 million BTC. This concentration of holdings within a few funds could impact tradable supply and increase price sensitivity to macroeconomic developments and investor flows.
The concentration of holdings within ETF baskets also has implications for market structure, as these holdings are not directly redeemable for underlying coins by most shareholders. This could constrain effective liquidity on exchanges, shaping price discovery as ETF demand becomes a larger share of trading volume.
While inflows have been consistent, they are subject to change based on macroeconomic conditions, profit-taking behavior, and regulatory developments. The next few months will be crucial in determining whether spot ETFs will surpass the 1.5 million BTC threshold, further influencing the interplay between institutional products and the digital asset supply.