Sean Farrell, the head of digital assets research at Fundstrat, has officially declared that the crypto winter is over, citing Bitcoin's breakout above the $86,000 mark and its climb to a new high last seen in January as the primary evidence. Building on this, Compass Point analyst Ed Engel noted that the market is now in the early stages of a new bull run, with renewed institutional interest in spot cryptocurrency products serving as the main catalyst for the rally.

The dramatic reversal in capital flows underpins this latest market movement. On Monday, US spot Bitcoin ETFs recorded a net inflow of $998.9 million, which helped push Bitcoin's price to $87,360 on Tuesday. Data shows that BlackRock (BLK.US) and its IBIT (IBIT.US) fund maintain the top spot with roughly $68 billion in net assets, followed by Fidelity's FBTC (FBTC.US) at about $13.9 billion and Grayscale's GBTC (GBTC.US) at approximately $11 billion. This strong inflow stands in sharp contrast to the outflow of around $450 million seen on September 15, which was the worst performance since June. On September 18 alone, net inflows reached $433 million, with FBTC (FBTC.US) and IBIT (IBIT.US) being the primary beneficiaries.

Where the recovery is spreading

The signs of recovery have now extended to the Ethereum space. On September 18, spot Ethereum ETFs recorded net inflows of approximately $143.8 million, with BlackRock (BLK.US) iShares Ethereum Trust leading the charge. As of that same day, ETHA (ETHA.US) had grown its asset base to about $9.2 billion, while the Grayscale Bitcoin Mini Trust reached roughly $5.1 billion. Fidelity's Ethereum fund has also attracted significant attention. These product flows indicate that institutional demand is broadening beyond Bitcoin into other major assets, validating the widespread improvement in market liquidity.

Is the rally built on solid ground?

However, questions remain about the purity of this upward momentum. Nicolai Søndergaard, a senior research analyst at Nansen, pointed out that the recent price action has been driven by a combination of rebounding ETF demand and a large-scale short squeeze, which forced the closure of roughly $919 million in short positions. If IBIT (IBIT.US), FBTC (FBTC.US), and ARKB (ARKB.US) can sustain near-billion-dollar daily inflows, it would prove that demand is independent and durable. If not, this could simply be a sharp rebound fueled by short covering rather than a sustainable trend.