Bank Liquidity Floods Into Bitcoin ETF Market Amid CLARITY Act Hopes

Bitcoin ETF inflows have seen a significant increase this week, reaching $626 million over three sessions. This surge in investment is attributed to the potential for bank liquidity to enter the crypto market for the first time.

Crypto executive Christopher Perkins of Franklin Templeton believes that if the CLARITY Act passes, it will provide federal preemption and allow banks to participate in the market more freely. Currently, regulators have made capital costs too high and state-by-state licensing burdens too steep, making it difficult for banks to enter.

Perkins notes that even without the CLARITY Act, the build will continue, albeit at a slower pace. Market makers are struggling to keep up with institutional onboarding, with new clients eager to trade rather than sitting on the sidelines. He also mentions that sentiment is poor but fundamentals are improving, creating opportunities.

On-chain data analysis shows a bullish divergence in Bitcoin's Net Capital Flow against price, similar to the setup before the cycle run from $15,000 to $126,000. This suggests that capital flows are turning positive while price remains suppressed, potentially leading to a major recovery.