Upcoming interest rate reduction expected to generate billions in daily investments for Bitcoin ETFs.

U.S. spot Bitcoin ETFs experienced net inflows exceeding one billion dollars over the last week as Bitcoin maintained a robust position above $110,000, creating a clear opportunity to assess supply and demand should the Federal Reserve lower interest rates next week.

Farside Investors reports a total of $741.5 million for the day, with Fidelity’s FBTC accounting for $299.0 million and BlackRock’s IBIT for $211.2 million, while intraday vendor figures may vary slightly due to the timing and processing of creations and redemptions.

On September 11, Bitcoin was trading around $114,132, following a record high of over $124,000 in August, as reported by Reuters.

At the current price levels, the calculations are straightforward. A net inflow of $757 million translates to approximately 6,640 BTC, which corresponds to nearly 15 days of new issuance at the post-halving rate of about 450 BTC daily.

The halving that occurred last April reduced the block subsidy to 3.125 BTC, and with around 144 blocks mined each day, the baseline issuance is close to that 450 BTC figure, subject to minor variations in block times.

Net ETF flow (USD)	Implied BTC bought (at $114,000)	Days of issuance absorbed (~450 BTC/day)
$500,000,000	≈4,386 BTC	≈9.7 days
$757,000,000	≈6,640 BTC	≈14.8 days
$1,000,000,000	≈8,772 BTC	≈19.5 days
$5,000,000,000 (per month)	≈43,860 BTC	≈97.5 days

The potential for another demand surge is contingent on policy decisions. A Reuters survey of economists conducted from September 8 to 11 indicates a 25 basis point reduction on September 17, with the survey noting that markets have already fully priced in this expectation.

CME’s FedWatch tool illustrates how fed funds futures reflect these probabilities in real time, with the understanding that its probabilities should be attributed to FedWatch. Should the Fed implement a cut and 10-year real yields decline from last week’s 1.79 percent, the macro environment that has supported record gold ETF inflows in recent months would align with the current Bitcoin ETF landscape, as lower real yields diminish the carry hurdle for long-duration assets.

Flows are already beginning to build again. Farside’s daily report indicates the strongest one-day intake since July, primarily driven by FBTC and IBIT. SoSoValue’s issuer-level dashboard supports this leadership division, with its latest one-day figures showing IBIT 1D net inflow near $211 million and FBTC near $299 million, consistent with the previously mentioned totals. Data vendors may differ slightly due to cut-off times and share-count updates, but the overall magnitude is evident.

The supply side has become mechanical after the halving.

Mined issuance now reflects the 3.125 BTC block subsidy and an average rate of approximately 144 blocks per day, which establishes a limit on organic supply entering ETF demand windows.

The halving block at height 840,000 on April 20, 2024, serves as a verifiable on-chain reference for the subsidy adjustment (block 840,000). Frictions within ETF operations have also diminished. In late July, the SEC authorized in-kind creations and redemptions for crypto ETPs, aligning Bitcoin and Ether products with the mechanics utilized by commodity ETPs.

This modification reduces cash drag and can tighten the arbitrage band, potentially affecting how swiftly primary market demand translates into spot purchases.

A rate cut would assess how much of that demand is sensitive to rates versus structural. One way to conceptualize this is in terms of “days of issuance absorbed per day.” If daily net inflows reach $250 million, $500 million, or $1 billion, the absorption rate would cover approximately 4.9, 9.7, and 19.5 days of issuance per day at a price of $114,000.

A price change alters the calculations; the same $757 million would absorb about 16.0 days at $105,000 and around 14.0 days at $120,000, reflecting the reduced number of coins acquired when prices are elevated. This sensitivity is immediate in the primary market and will interact with dealer inventories, cross-venue liquidity, and futures basis costs.

Derivatives carry costs remain moderate by 2025 standards. Aggregated three-month rates across major platforms generally cluster in the mid-single digits, a range that neither imposes a significant headwind on hedged ETF-related inventory nor invites extreme carry compression.

If a rate cut lowers funding and basis, the relative attractiveness of unhedged, spot-only exposure within ETFs may increase in asset allocation models that manage tracking error and gross leverage.

The stock of available coins matters alongside flow.

Glassnode’s illiquid supply metric, which tracks coins held by entities with minimal or no spending history, reached a record high of over 14.3 million BTC in late August. This inventory is historically slow to mobilize, so primary ETF demand often relies on exchange balances and dealer warehousing rather than immediate long-term holder distribution.

Mining economics play a background role as a release valve. Luxor’s hashprice analysis indicates that post-halving revenue per unit of hash remains constrained, and while network difficulty reached new peaks through August, the direct contribution to circulating supply is limited by the protocol. Pressure on miner treasuries may release some inventory, but this channel is finite compared to ETF intake at the aforementioned rates.

The scenario for next week is therefore narrow and testable. If the Fed reduces rates by 25 basis points and ETF net inflows shift into a daily range of $500 million to $1 billion for several sessions, the primary market would absorb approximately 10 to 20 days of issuance each day at current prices, tightening the available float unless exchange balances are replenished.

If the Fed maintains rates and real yields stabilize, flows could decline to flat or around $250 million, suggesting zero to about five days of issuance absorbed per day, a situation where miner and trader supply can meet demand without noticeable dislocations.

The in-kind regime, the current basis term structure, and the share of illiquid supply all indicate how swiftly any imbalance would manifest in spreads and price impact rather than in a prolonged squeeze.

For the time being, the data provides a straightforward benchmark. On one day, the U.S. spot ETF flow nearly equaled two weeks of new Bitcoin, and the policy decision on September 17 will determine whether that ratio becomes a regular occurrence or an exception during a strong week.

The post Next week’s rate cut to unleash billions in daily inflows for Bitcoin ETFs appeared first on CryptoSlate.