Spot Bitcoin ETFs See Biggest Inflows Since May as Yields Fall

Bitcoin's price surge above $70,000 has not only revived the crypto market but also put spot Bitcoin ETFs back in focus. The recent rally was triggered by a sharp reversal in fund flows, suggesting institutional demand may be returning.

The U.S. Treasury's decision to expand purchases of longer-dated government bonds pushed Treasury yields lower and the dollar to a three-month low, creating a more favorable backdrop for Bitcoin. Lower yields reduce the relative appeal of fixed-income assets, while a weaker dollar supports the appeal of dollar-priced alternative assets.

Bitcoin got an additional boost from a major short squeeze, with over $2.7 billion in crypto shorts liquidated over 24 hours. This led to significant inflows into U.S. spot Bitcoin ETFs, with BlackRock's iShares Bitcoin Trust (NASDAQ:IBIT) attracting roughly $284.7 million on Wednesday.

The Treasury announcement may be the more durable catalyst for Bitcoin's price move. The department plans to increase buybacks of longer-term Treasury securities, which could have a lasting impact on yields and dollar strength.