Maximizing Bitcoin Earnings with ETF Data

Maximizing Bitcoin Earnings with ETF Data

Since the introduction of Bitcoin Exchange Traded Funds (ETFs) in early 2024, Bitcoin has hit new all-time highs with several months of double-digit gains. However, as impressive as this performance is, there is a way to significantly outperform Bitcoin returns by using ETF data to guide your trading decisions.

Bitcoin ETFs and their influence

Bitcoin ETFs, launched in January 2024, quickly amassed large amounts of Bitcoin. These ETFs, tracked by various funds, allow institutional and retail investors to gain exposure to Bitcoin without owning it directly. These ETFs have accumulated billions of USD in BTC, and tracking this cumulative flow is critical to monitoring institutional activity in the Bitcoin markets, helping us gauge whether institutional players are buying or selling.

Figure 1: Cumulative BTC ETF (USD) flows exceeded $18.5 billion. View live chart 🔍

Daily inflows of BTC-denominated ETFs indicate that large-scale investors are accumulating Bitcoin, while daily flows suggest they are exiting positions during the trading period. For those looking to ride on Bitcoin’s already strong performance since 2024, this ETF data provides a strategic entry and exit point for Bitcoin trades.

Figure 2: Daily BTC ETF (BTC) flows show a regular accumulation of over 10,000 BTC per day. View live chart 🔍

A simple strategy based on ETF data

The strategy is relatively simple: buy Bitcoin when ETF inflows are positive (green bars) and sell when outflows occur (red bars). Surprisingly, this method allows you to outperform even during Bitcoin bullish times.

This strategy, while simple, has consistently outperformed the broader Bitcoin market, capturing price momentum at the right times and avoiding potential downturns by following institutional trends.

Figure 3: Each trade following this institutional entry/exit strategy.

The power of combination

The real secret of this strategy lies in the combination. Compounding gains over time significantly increases your returns, even during periods of consolidation or minor volatility. Imagine starting with $100 in capital. If the first trade has a 10% return, you now have $110. On the next trade, another 10% gain on $110 brings your total to $121. By compounding these gains over time, even modest gains add up to significant profits. Losses are inevitable, but the combined gains far outweigh the occasional dip.

Since the launch of Bitcoin ETFs, this strategy has delivered returns of over 100% during a period when just holding BTC returned about 37%, or even compared to buying Bitcoin on the day the ETF launched and selling right at the peak historical. , which would have returned about 59%.

Figure 4: Over 100% compounded gains since ETF launch following this strategy.

Can an additional advantage be expected?

Recently, we have begun to see a sustained trend of positive ETF inflows, suggesting that institutions are once again accumulating Bitcoin heavily. Since September 19, every day has seen positive inflows, which, as we see, have often preceded price increases. BlackRock and their IBIT ETF alone have amassed over 379,000 BTC since inception.

Figure 5: BlackRock alone amassed over 379,000 BTC in just a few months. View live chart 🔍

Conclusion

Market conditions can change and there will inevitably be periods of volatility. However, the consistent historical correlation between ETF inflows and Bitcoin price growth makes it a valuable tool for those looking to maximize their Bitcoin gains. If you are looking for an effortless, set-it-and-forget-it approach, buy-and-hold may still be suitable. However, if you want to try to actively increase your returns by leveraging institutional data, tracking the ins and outs of Bitcoin ETFs could be a game changer.

For a more in-depth look at this topic, check out a recent YouTube video here: Using ETF Data to Outperform Bitcoin (Must Watch)