The surge in demand for bitcoin from the newly launched exchange-traded funds in the U.S., coupled with the decreasing available supply, could trigger a short-term hype cycle for the digital asset, said Bloomberg Senior ETF Analyst Eric Balchunas.

“Because it's a scarce asset and there's not a ton of people trading it — a lot of people just hold — the float on it is pretty small. The more demand from ETFs, the more the float is affected. And the more the float’s affected, the price goes up, which would create more demand,” said Balchunas in an interview. “You could have an upward spiral that goes a little while.”

Balchunas, who has been very closely tracking the launch of the bitcoin spot ETFs, had estimated the ETFs would see an upper band of inflows of $10-15 billion. So far, these …