$IBIT. $FBTC. $500M inflows.

Sounds like billions of $BTC bought instantly, right?

Not even close. Here’s how ETF flows actually work 👇:

When you hear "$500M ETF inflows," it sounds like someone just bought $500M worth of Bitcoin that second but that’s not how it works.

Here’s the reality 👇

When investors buy shares of a spot Bitcoin ETF (like BlackRock’s $IBIT or Fidelity’s $FBTC), they’re not buying Bitcoin directly.

They’re buying shares that represent real Bitcoin held by the fund.

The ETF doesn’t buy Bitcoin every time their customers do.

Instead, it works through Authorized Participants (APs), usually big institutions like JPMorgan, Jane Street, or Virtu.

When there’s high demand, APs send cash to the ETF issuer.

The issuer then uses that money to buy real Bitcoin, usually from OTC desks or large exchanges.

That Bitcoin goes into cold storage, mostly handled by Coinbase Custody.

So yes, these ETFs actually hold real Bitcoin.

But the process takes time.
ETF inflows don’t move the market instantly.

Sometimes it takes hours, sometimes days, depending on liquidity and how the APs execute their orders.

Outflows work the same way in reverse.

When people sell ETF shares, the APs redeem them, meaning the fund releases or sells Bitcoin from custody.

That’s why ETF inflows and outflows matter over time not always minute by minute.

The ETF price tracks Bitcoin through something called NAV arbitrage.
If the ETF price drifts from Bitcoin’s spot price, APs step in:

👉 If ETF is too high → they sell ETF shares, buy BTC.

👉 If ETF is too low → they buy ETF shares, sell BTC.
This constant balance keeps both prices aligned.

Your returns come purely from Bitcoin’s price changes, minus small management fees.

So when you see "ETF inflows hit $1B," it really means:
institutions are creating new ETF shares, sending money to issuers, who then go out and buy real Bitcoin that ends up locked in custody.

That’s how the ETF quietly turns TradFi money into real Bitcoin demand.

It’s a slow, mechanical bridge connecting Wall Street to the Bitcoin network, one batch of cold wallets at a time.