Bitcoin ETF inflows could serve as potential tailwind for Q4 gains

Bitcoin (BTC) is trading near $123,000 on Wednesday and could be set for a strong Q4 rally amid a resurgence in institutional appetite for spot BTC exchange-traded funds (ETFs).

Bitcoin ETFs to see strong inflows in Q4 as institutional demand accelerates

Bitcoin ETFs are on track to surpass their 2024 record of $36 billion, according to Bitwise Chief Investment Officer (CIO) Matt Hougan in a note on Tuesday.

He clarified that although the current inflows appear minor, with only $22.5 billion in the first nine months of 2025, there's still much room for an end-of-year surge.

"From where I sit, the stars are aligned for a very strong Q4 for flows — more than enough to push us to a new record (and a new all-time high in bitcoin's price)," Hougan wrote.

Hougan cited three major catalysts for a bullish final quarter for Bitcoin ETFs, including BTC's price returns, debasement trade and growing institutional approvals. He stated that Bitcoin is seeing more institutional recognition, with Morgan Stanley advising up to 4% BTC allocation for risk-tolerant clients.

Another catalyst is that gold and Bitcoin are the best-performing major assets this year, fueling what Wall Street has dubbed the "debasement trade." The term implies betting on assets that thrive when fiat currencies lose value.

With the US money supply expanding by 44% since 2020 and JPMorgan's acknowledgement of the debasement trade trend, Hougan suggests that the narrative is going mainstream, which is profitable for Bitcoin.

He highlighted that the bullish potential could fuel spot BTC ETF inflows, citing Bitcoin's surge to a new all-time high of $126,199 on Monday, fueled by over $3.5 billion ETF inflows last week.

The wave of inflows constitutes one of the strongest buying momentum since April, indicating renewed institutional appetite, according to on-chain analytics firm Glassnode in a report on Wednesday.

Glassnode stated that a sustained trend of inflows between October and November could spur a further rally for BTC, with Q4 historically being Bitcoin's strongest quarter.

The recent resurgence in inflows pushed Bitcoin's spot volume to its highest level since April, suggesting increased liquidity and strength backing the top crypto's momentum.

The rebound in spot volume was accompanied by a surge in futures open interest, which reached a new all-time high of nearly $50 billion as Bitcoin climbed above $120,000, according to Glassnode. Annualized funding rates also rose above 8%, reflecting strong demand for leveraged longs and growing speculative momentum. 

Glassnode stated that although the rise does not yet signal overheating, rising funding costs have historically preceded brief market pullbacks as excess leverage unwinds.

Bitcoin trades near $123,000 on Wednesday, with US spot BTC ETFs attracting over $2 billion in the past two days, setting the stage for potential record inflows by the end of the week.