Bank Liquidity to Flood Crypto Market as Bitcoin ETF Inflows Surge

Bitcoin ETFs have seen significant inflows this week, with $626 million invested over three sessions. This surge in institutional interest comes as Franklin Templeton executive Christopher Perkins predicts that bank liquidity is about to enter the crypto market for the first time.

Perkins cited the proposed CLARITY Act, which would provide federal preemption and simplify state-by-state licensing requirements. He stated that regulators have made the capital costs too high and the licensing burden too steep, but this could change with a single federal regulatory framework.

Market makers are struggling to keep up with institutional onboarding, according to Perkins, who said that new clients are lining up to trade rather than sitting on the sidelines. This disconnect between sentiment and fundamentals is where opportunities tend to form.

The on-chain data shows a bullish divergence in Bitcoin's Net Capital Flow against price, similar to what preceded the cycle run from $15,000 to $126,000. Capital flows are turning positive while price stays suppressed, a setup that has historically appeared before major recoveries.