Billions of dollars are flowing back into Bitcoin exchange-traded funds (ETFs), but the headline figures alone do not reveal how much of the demand comes from institutions, according to digital asset manager CoinShares.

US crypto investment products had attracted roughly $4.1 billion in September, with BlackRock's iShares Bitcoin Trust ETF (IBIT) accounting for more than 53% of those inflows, CoinShares head of research James Butterfill told Cointelegraph. In a Sept. 25 market update, the firm said crypto investment products drew about $3.5 billion across the industry over the preceding five trading days.

Asked whether institutional investors were returning to crypto, Butterfill said, "Potentially yes, but in the ETF it is very difficult to disaggregate institutional and retail money."

That blurriness is structural: spot Bitcoin ETFs trade on US stock exchanges and can be purchased through ordinary brokerage accounts, so fund flow data does not identify who is behind each order. ETF buying can reflect arbitrage strategies as well as directional bets on rising Bitcoin prices, making inflows an imperfect measure of bullish conviction. Butterfill added that investors are also looking beyond tokens toward businesses that profit from crypto adoption.

IBIT offers clues to institutional demand

Butterfill said many institutional investors use IBIT for the Bitcoin basis trade. The strategy involves buying shares of a spot Bitcoin ETF while shorting Bitcoin futures aiming to profit from the difference between spot and futures prices as the two converge. Because the return comes from the spread narrowing rather than from Bitcoin's price direction, the trade is largely market-neutral.

"At the moment the basis trade has an attractive yield at 6%, and month to date IBIT has seen over 53% of the $4.1 billion inflows," Butterfill said.

Taken together, the figures suggest positive sentiment is broad-based across both institutional and retail investors, he added.

More recent CoinShares data shared with Cointelegraph showed September inflows into US crypto investment products had risen to about $4.44 billion, compared with $4.53 billion globally. Bitcoin (BTC) products led inflows with $2.84 billion, followed by Ether (ETH) with around $946 million, while Zcash (ZEC), a privacy-focused token, ranked third with $284 million.

CoinShares points to digital asset rotation

Butterfill also highlighted growing investor interest in companies that make money from crypto adoption. "The rotation within digital assets deserves more attention," he said, citing early-September CoinShares data that showed more than $100 million flowing into blockchain equities over the preceding month.

Over the next year, Butterfill expects investors to watch closely which businesses generate revenue from tokenization, payments and trading infrastructure as those markets expand. He pointed to estimates that stablecoin assets — crypto tokens pegged to fiat currencies such as the US dollar — could approach $4 trillion by the end of the decade, and said that Hyperliquid, a decentralized exchange, was recording up to $9 billion in daily trading volume.