Bitcoin Price Rebound Fuels by BlackRock ETF Inflows

The recent rebound in Bitcoin's price is attributed to a surge in inflows to BlackRock's iShares Bitcoin Trust (IBIT), a spot Bitcoin ETF. According to on-chain data from Arkham, IBIT absorbed around $1.6 billion in September, mostly in the latter half of the month. This influx of capital tracked Bitcoin's recovery, with the price rising to around $87,000, a gain of roughly 16%.

The flows came in waves, with a $454 million inflow on September 3, followed by a $381.4 million inflow on September 21, the largest single-fund daily inflow of the year. However, daily net inflows began to shrink during the record week, from $998.95 million on September 21 to $134.47 million on September 25.

The relationship between inflows and price is a key indicator of the market's health. The fact that inflows turned positive on September 17 and stayed positive for the rest of the run suggests that new money was coming into the products while the price rose. However, the late-month picture is less convincing, with fewer new dollars arriving each day, and they may no longer be enough to push the price higher on their own.

The recovery case strengthens if inflows pick back up and Bitcoin makes new highs above the $87,000 area. The case weakens if inflows keep shrinking while the price drifts lower, which would point to heavier selling elsewhere in the market.