Bitwise predicts record bitcoin ETF inflows in Q4 as 'debasement trade' kicks in

Crypto asset manager Bitwise predicts that U.S. spot bitcoin exchange-traded funds will attract record inflows in the fourth quarter, enough to surpass their 2024 total by year-end.

At the start of the year, Bitwise Chief Investment Officer Matt Hougan predicted that the bitcoin ETFs would attract more inflows in 2025 than their $36 billion debut year. So far, they've drawn in around $22.5 billion, on pace for about $30 billion by year-end — falling short of the inaugural annual watermark. However, in a memo to clients late Tuesday, Hougan said he's not worried, expecting a strong fourth quarter to push flows to new all-time highs.

Three catalysts for strong Q4 flows

The Bitwise CIO pointed toward three catalysts for a strong quarter: wealth manager approvals, bitcoin's recent price surge, and the "debasement trade" narrative.

Morgan Stanley recently introduced formal crypto allocation limits within multiasset portfolios, recommending 0% exposure for conservative investors and modest allocations of 2% to 4% for those with higher risk tolerance. The move mirrors a broader industry shift, with Wells Fargo also now allowing advisors to allocate client funds to bitcoin ETFs and other major firms like UBS and Merrill Lynch expected to follow. While adoption across advisory networks and tens of thousands of financial professionals will take time, conversations Bitwise has had with advisors in recent months suggest strong pent-up demand, Hougan said.

Gold and bitcoin have emerged as the top-performing major assets of the year, driving what Wall Street calls the "debasement trade" — investing in assets that benefit when governments erode currency value. With the U.S. money supply up 44% since 2020 and JPMorgan highlighting the trend in a recent report, the narrative is increasingly going mainstream. As advisors prepare year-end reviews, many are expected to add gold and bitcoin to client portfolios to capture the year's strongest performers, the Bitwise CIO argued.

Historically, strong price gains have also driven higher demand for bitcoin ETFs as renewed media and investor attention fuel inflows, Bitwise noted. Bitcoin recently surged past $125,000, up 9% in early October to set new all-time highs, though it has since corrected slightly and currently trades for around $122,744, according to The Block's BTC price page . Every quarter with double-digit bitcoin returns has coincided with double-digit billions flowing into bitcoin ETFs, suggesting another wave of momentum is likely in Q4, Hougan said.

"In the first four trading days of the quarter, we've already had $3.5 billion in net flows, bringing total YTD flows to $25.9 billion," Hougan concluded ahead of the latest flow data. "We have 64 more days to get another $10 billion. I think we'll do that and then some."

The bitcoin ETFs have since added another $875.6 million to that total on Tuesday, led by BlackRock's IBIT with $899.4 million, according to data compiled by The Block. On Monday, the ETFs attracted their largest daily haul since pro-crypto Donald Trump won the U.S. presidential election last November — bringing in $1.21 billion.