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Scott Melker · Oct 20, 2026 · 64 min

Bitcoin's Biggest ETF Just Took In $665 MILLION. So Who's Still Selling? | Alex Thorn

Galaxy's Alex Thorn and Arch Public's Andrew join Scott Melker to explain a record IBIT inflow day, arguing it mostly reflects conversion of spot Bitcoin into ETFs and TradFi wealth platforms pulling in assets. They argue Bitcoin has likely bottomed after the shallowest drawdown in cycle history, that macro stress hasn't hit Bitcoin because big macro traders aren't in yet, and that on-chain data shows old-coin distribution and weak treasury-company buying. Also covered: self-custody supply-chain attacks and multisig, and SEC tokenization exemption opt-outs.

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Where they stand

Crypto

Bullish

Bitcoin is believed to have bottomed with institutional adoption deepening through TradFi wrappers, though retail demand is thin and old-coin distribution continues.

Medium conviction · years

Markets

Bearish

Macro backdrop is confusing and stressed, with hot inflation, high oil, rising yields and falling bank stocks, though equities remain only a couple percent off highs.

Low conviction · weeks

AI

Neutral

AI revenue worries have recently made investors nervous, and a global AI trade meltdown is flagged as a risk, but little else is argued.

Low conviction · weeks

Key takeaways

  1. IBIT's large inflow with outflows at other ETFs is likely spot Bitcoin being converted into the ETF, reflecting Friday's demand given the authorized participant notice timing. 2:28
  2. TradFi giants (BlackRock, JPMorgan, Morgan Stanley) are leaning into Bitcoin to gather assets under management; ETF-based lending will compete with crypto-native lenders within 12-24 months. 13:04
  3. Alex Thorn is pretty confident Bitcoin has seen its bottom: shallowest drawdown (about -53%) in cycle history, retook the 50-week MA, and preempted the 400-days-from-high pattern. 18:36
  4. Bitcoin hasn't reacted to macro stress (bank stocks down, hot inflation, high oil) because big macro traders aren't in the trade yet; sensitivity would rise at higher prices. 23:41
  5. Retail demand is thin; MSBT flows show small, long-term allocations rather than a retail surge. 27:31
  6. Self-custody supply-chain attack on hardware wallets highlights multisig as the best option; no coins were stolen from multisig wallets in the Coldcard exploit. 32:04
  7. Several large issuers opted out of third-party tokenized stock listings; Thorn fears the SEC innovation exemption may be too restrictive to compete with offshore markets. 38:47
  8. Thorn's flow metric shows net distribution of over 100k BTC this year, with treasury companies barely buying since May; he doesn't expect it to turn positive for the year. 47:03

Calls and positions

  • Bitcoin will probably outperform other asset categories over the next 10 years, and JPMorgan's 10% annual return figure is probably a bit low.
    “will it outperform over the next 10 years in terms of asset categories? Yeah, probably. I think that 10% number's probably a smidge low.”
    Very bullishPrediction: outperform other assets, more than 10% annual (next 10 years)Andrew, Oct 20, 2026Watch at 9:12#Bitcoin#JPMorgan Chase
  • Crypto-native lending will face trouble within 12 to 24 months as TradFi platforms offer Bitcoin ETF-backed loans at competitive rates.
    “we're probably anywhere from 12 to about 24 months to kind of the crypto native lending space having a smidge of trouble.”
    BearishPrediction: crypto-native lending under pressure (12 to 24 months)Andrew, Oct 20, 2026Watch at 13:04#Bitcoin
  • Thorn doesn't expect the net flow line to turn positive for the year.
    “I don't think that the black dotted line will turn positive for the year.”
    BearishPrediction: net flow stays negative (2026)Alex Thorn, Oct 20, 2026Watch at 47:36#Bitcoin
  • Year-to-date Bitcoin ETF net flows will finish the year in positive territory.
    “I I think we'll finish in positive territory”
    BullishPrediction: positive net ETF flows (end of 2026)Alex Thorn, Oct 20, 2026Watch at 15:51#Bitcoin

Views expressed

  • The record IBIT inflow alongside outflows elsewhere is likely conversion of physical spot Bitcoin into the ETF.
    “I think this is very likely converting physical spot Bitcoin into the ETF.”
    BullishAlex Thorn, Oct 20, 2026Watch at 2:28#Bitcoin
  • Thorn is pretty confident Bitcoin has already seen its bottom, even if price chops sideways.
    “I'm pretty confident we've seen the bottom here, even if we chop.”
    Very bullishAlex Thorn, Oct 20, 2026Watch at 18:36#Bitcoin
  • Retaking the 50-week moving average after a bear market has almost always signalled the bottom, with FTX as the lone exception.
    “there's there's a very very limited number of exceptions to when you retake the 50-week after being in a bear market”
    BullishAlex Thorn, Oct 20, 2026Watch at 19:09#Bitcoin
  • Bitcoin isn't yet sensitive to macro stress because large macro traders haven't entered the trade; sensitivity will rise as price goes higher.
    “you still don't really have the big macro traders in the Bitcoin trade at this moment.”
    BullishAlex Thorn, Oct 20, 2026Watch at 23:41#Bitcoin
  • Retail demand for Bitcoin remains small, with MSBT showing only small long-term allocations from wealthy clients.
    “there are small pockets of conversations that are happening, and people are making small allocations”
    NeutralAndrew, Oct 20, 2026Watch at 29:11#Bitcoin
  • Multisig is the best self-custody option, since no coins were stolen from multisig wallets in the Coldcard exploit.
    “Not one satoshi flowed out of a multi-sig.”
    NeutralAlex Thorn, Oct 20, 2026Watch at 32:39#Bitcoin
  • Thorn fears the SEC innovation exemption may be too restrictive to compete with the growing offshore tokenized stock market.
    “if I have one fear about the innovation exemption is that it's too restrictive to compete with the you know, growing offshore market.”
    BearishAlex Thorn, Oct 20, 2026Watch at 44:50#Tokenization
  • Treasury companies have not made meaningful Bitcoin purchases since May, and net distribution this year exceeds accumulation by over 100,000 coins.
    “we've net distributed a lot more this year than we've, you know, net accumulated, right?”
    BearishAlex Thorn, Oct 20, 2026Watch at 47:03#Bitcoin

Companies, projects and topics mentioned

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