(Bloomberg) — Bitcoin price swings are intensifying after the digital asset surged to a record high, and a key question now is how investors in U.S. exchange-traded funds will react to the cryptocurrency.

of Bitcoin Volatility Index T3, which uses option prices to give a sense of expected 30-day swings in the tick, has jumped to its highest level since the fallout from the collapse of Sam Bankman-Fried's FTX exchange. The surge suggests that the crypto market should prepare for more Bitcoin spins.

A net $8.9 billion has poured into U.S. spot-Bitcoin ETFs since they debuted on Jan. 11, catalyzing the digital asset's rise to a peak above $69,000 on Tuesday. The sign quickly bounced back from the high, leading to an intraday swing of more than 14 percentage points, while Wednesday's range was 8 percentage points. Such moves can make some ETF investors second-guess themselves.

“Hopefully everyone was warned that this could happen, but even so, it was probably surprising to many and unfortunately perhaps devastating to some,” wrote Noelle Acheson, author of Crypto is macro now newspaper. “If yesterday's moves scared away for good many people who don't want this kind of action in their portfolios, then this is good news for them and for the market.”

Net flows

The nine spot-Bitcoin ETFs that debuted in early January, including from BlackRock Inc. and Fidelity Investments, earned a record net inflow of nearly $1 billion on Tuesday despite that session's volatility, according to Bloomberg Intelligence. Inflows to both funds slowed to $287.4 million on Wednesday.

This suggests that “Bitcoin ETF investors are likely among the strongest hands of the asset and are unlikely to run for exits during pullbacks,” BI analysts Eric Balchunas and Athanasios Psarofagis wrote in a note.

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 exhibited similar dynamics, analysts added.

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

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