As a seasoned crypto investor with over a decade of experience under my belt, I’ve witnessed the ebb and flow of the digital asset market like the tide. The approval of spot Bitcoin ETFs was undeniably a significant milestone this year, fueling anticipation that it would be the gateway to mainstream adoption by traditional finance investors. However, observing the recent decline in assets under management (AUM) of these funds and the surge in outflows, I can’t help but feel a sense of déjà vu.
One significant event in crypto this year was the approval of Bitcoin Spot ETFs in January, which sparked a massive increase in demand for Bitcoin. Yet, eight months later, it seems that enthusiasm for these products is starting to dwindle.
In his latest update on X, Jim Bianco, head of Bianco Research, expressed that Bitcoin Exchange-Traded Funds (ETFs) have fallen short of the expectations set before their launch. He highlighted that the total value of all 11 U.S. spot Bitcoin ETFs has significantly decreased since hitting a high of $62 billion in June.
Based on Bianco’s data, the combined value of all Bitcoin ETFs stands at approximately $46 billion – the least it has been for over four months. With withdrawals on the rise, ETF investors are currently facing an estimated potential loss of about $2.2 billion that hasn’t yet materialized.
Not a TradFi Adoption Vehicle – Yet?
Bianco stated that contrary to the popular belief that Bitcoin ETFs would drive mainstream BTC adoption by traditional finance (TradFi) investors, the funds have received “very little new money.” Instead, a majority of the recorded inflows were from “onchain holders moving back to TradFi accounts.”
He noted that the investment giant BlackRock has confirmed the limited presence of financial advisors in the Bitcoin ETF space. Earlier in June, BlackRock’s chief investment officer for index investments, Samara Cohen, said that about 80% of Bitcoin ETF purchases have been made by self-directed investors using online brokerage accounts.
To date, these tools haven’t delivered on the promise of a ‘boom’ as anticipated. Few have arrived, and those that did have suffered losses and seem to be departing, with approximately $1 billion leaving in the past eight days,” he pointed out.
Bitcoin ETFs Need More Time
Bianco further pointed out that Bitcoin ETFs still have the potential to drive TradFi adoption, however, a few things are needed before the market booms.
It’s anticipated that the upcoming Bitcoin halving in 2028, along with advancements in on-chain tools within DeFi, NFTs, and other sectors, may well spur the popularity of Bitcoin Exchange Traded Funds (ETFs).
Bianco stated that a bit more patience, along with a few more seasons passing – perhaps even a couple winters – and some key advancements will be necessary before any significant progress is made,
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2024-09-10 07:26