Spot Bitcoin ETF Hype Dies Down, Normalcy Sets In

During the week ending April 12, a total of 1,766 bitcoins were withdrawn from Bitcoin-linked SPOT Exchange Traded Funds (ETFs) compared to the previous week’s inflow.

James Seyffart, an ETF analyst at Bloomberg Intelligence, noted in a post about X that approximately 83% of all U.S. ETFs experienced no new investments on Monday.

Seyffart pointed out that the process of issuing and redeeming ETF shares, including bitcoin ETFs, occurs when there is a significant difference in supply and demand, and the associated costs are less than hedging. The sizes of these creation units can vary from 5,000 to 50,000 shares. For smaller discrepancies between supply and demand, market makers will manage share trading as they would with regular stocks.

In simpler terms, even though trading volumes have slowed down recently for these new ETFs, it doesn’t necessarily mean that lower trading activity is the new norm. The extraordinary high volume during their initial stages was unprecedented compared to other ETFs. However, traders may experience even greater inflows in the future.

“According to Samir Kerbage, Hashdex’s chief investment officer, there is a good chance that investments in bitcoin will increase again.”

Large financial institutions such as banks, endowments, and pension funds from around the world are just starting to thoroughly examine Bitcoin through newly introduced Bitcoin ETFs. As these institutions make their choices over the next few months, we can expect additional inflows, which could lead to new records for this highly successful ETF launch in US history.