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When an investor buys shares in a U.S. spot bitcoin ETF, new money enters the fund — and because most of those funds hold actual bitcoin, that capital eventually becomes $BTC.
The reverse is equally mechanical: when shareholders sell, capital exits and the fund's bitcoin holdings shrink.
Understanding this cycle is the entry point for reading ETF flow data, which has become one of the more closely watched metrics in crypto markets. How the Flow Mechanism Works The core concept is straightforward.
Bitcoin ETF flows track the movement of money into and out of bitcoin exchange-traded funds. An inflow is triggered when investors purchase ETF shares, bringing fresh capital into the fund.
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