(Bloomberg) -- Bitcoin price swings are becoming more intense following the digital asset’s run to a record high, and a key question now is how investors in US exchange-traded funds for the cryptocurrency will react.

The T3 Bitcoin Volatility Index, which uses options prices to give a sense of expected 30-day swings in the token, has jumped to the highest level since the aftermath of the collapse of Sam Bankman-Fried’s FTX exchange. The spike suggests the crypto market should brace for more Bitcoin gyrations.

A net $8.9 billion has poured into US spot-Bitcoin ETFs since they went live on Jan. 11, catalyzing the digital asset’s surge to a peak above $69,000 on Tuesday. The token quickly reversed from the high, leading to an intraday swing of more than 14 percentage points, while Wednesday’s range was 8 percentage points. Such moves could conceivably make some ETF investors queasy.

“Hopefully, they were all warned this could happen, but even so, it was probably startling to many and unfortunately perhaps devastating to a few,” wrote Noelle Acheson, author of the Crypto Is Macro Now newsletter. “If yesterday’s moves permanently scared away many who do not want this kind of action in their portfolios, then that is good news for them and for the market.”

Net Inflows

Nine spot-Bitcoin ETFs that debuted early January, including from BlackRock Inc. and Fidelity Investments, wooed a record net inflow of nearly $1 billion on Tuesday despite that session’s volatility, according to Bloomberg Intelligence. The inflows into the two funds slowed to $287.4 million on Wednesday.

This suggests “Bitcoin ETF investors will likely be among the asset’s strongest hands and unlikely to run for the exits during drawdowns,” BI analysts Eric Balchunas and Athanasios Psarofagis wrote in a note. 

The ETFs are being used as a small “hot sauce” allocation to core portfolios, meaning investors will have a greater tolerance for volatility, they said. Cathie Wood’s ARK Innovation ETF displayed a similar dynamic, the analysts added.

Bitcoin was little changed at around $66,945 on Thursday, as speculators paused for breath after a tumultuous stretch of trading.

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