Bitcoin BTC -1.25% could experience a positive demand shock in the coming months from new inflows from registered investment advisors, an analyst said.

A positive demand shock refers to a sudden surge in the desire for an asset, such as bitcoin, potentially triggered by substantial inflows of capital into a particular market.

CoinShares Head of Research James Butterfill highlighted a dynamic that could trigger such an event, noting that spot bitcoin exchange-traded funds have not yet been made available to the RIA market."Generally, fund platforms used by RIAs require three months of trading data before they can include newly issued ETFs. Thus, there might be an influx of investments from the RIA market as it becomes accessible," Butterfill said.

He emphasized that currently, only the investment advisory firm, the Carsen Group, has permitted the trading of spot bitcoin ETFs. "Given that the RIA market represents about $50 trillion in assets, the potential inflows could be significant. For instance, if 10% of RIAs chose to invest 1% of their portfolios, this could result in approximately $50 billion in additional inflows," Butterfill added.

In a recent blog post, Butterfill noted the increasing demand and decreasing supply dynamic that is currently unfolding within the bitcoin market. "The launch of multiple spot bitcoin ETFs on January 11 has led to an average daily demand of 4500 bitcoins (trading days only), while only an average of 921 new bitcoin were minted per day," he said.

He added that the newly minted bitcoin supply cannot keep up with demand and that ETF issuers have to source bitcoin mainly from the secondary market. "We can see this in the data, where OTC desk coin holdings have fallen by 74% since their 2020 peak, much likely due to ETF demand in recent years," he said.

Spot bitcoin ETF inflows reach record highs

Last week, net inflows for U.S. spot bitcoin ETFs hit record levels. Net inflows for the ten spot bitcoin ETFs combined reached $2.57 billion last week — up 15 % from the $2.24 billion worth of inflows generated the week prior — according to data from BitMEX Research and Farside Investors.

BlackRock’s IBIT continued its dominance, generating $2.48 billion in inflows. Fidelity’s FBTC came second with $717.9 million and VanEck’s HODL third with $247.8 million. However, Grayscale’s converted GBTC fund witnessed $1.25 billion in outflows, while Invesco’s BTCO also contributed $29.4 million in outflows.

Total net inflows since spot bitcoin ETF trading began on Jan. 11 now stand at just over $12 billion.

The largest digital asset by market cap increased by 1.92% in the past 24 hours and is now changing hands for $68,200 at 8:28 a.m. ET, according to The Block’s Prices Page. The GM 30 Index, representing a selection of the top 30 cryptocurrencies, has increased by 2.45% to 152.93 in the past 24 hours.