Here’s why investors shouldn’t get excited about Bitcoin ETF ins and outs: Analyst

Spot Bitcoin ETFs have become a key part of the entire cryptocurrency ecosystem in just four months after going live in the US financial markets.

However, Bloomberg ETF specialist Eric Balchunas explained that people shouldn’t get too carried away when they see noticeable changes in short-term flows.

May covers April’s losses

These products were finally given the green light by the US SEC in mid-January and caused chaos when they launched, leading to increased volatility, but also a new all-time high for the price of BTC in just two months. This happened when ETFs other than Grayscale’s GBTC were attracting impressive inflows.

However, the trend started to change on a few occasions in March, but mostly in late April and early May. In fact, there is a seven-day losing streak from April 24 to May 2, when outflows soared to more than $1.2 billion.

The price of bitcoin was expected to suffer during this period, falling to a multi-month low of less than $57,000. However, those dark days also passed and ETFs started attracting big inflows in the last week or so.

Also, Eric Balchunas stated that the May inflows of $1.3 billion had covered all the losses seen in April, which is perhaps why the price of BTC has soared around ten thousand and currently stands at 67,000 dollars

Bitcoin ETFs have put together a solid two weeks with $1.3 billion in inflows, offsetting all of the negative flows in April, putting them back around the high of +12.3 million dollars net since launch. This key number IMO because it compensates for inputs and outputs (which are normal) pic.twitter.com/tdnZOKEocM

— Eric Balchunas (@EricBalchunas) May 17, 2024

Don’t get too excited

While the most recent filings with the US SEC revealed numerous large entities entering the Bitcoin ETF landscape, such as Morgan Stanley, the State of Wisconsin Investment Board (SWIB) and Bracebridge Capital, these products also they attract a certain cohort of retail investors, who are more inclined to make emotional decisions about when to buy and sell assets.

As such, Balchunas warned people to leave emotions at the door, as such ins and outs are just a “part of ETF life.” He believes they will become net positive in the long run, which appears to be the case now with over $12 billion already poured in.

The last two months show why it’s better not to have excessive emotional flows in and out, part of ETF life, but a) I think they’ll get a positive long-term result b) the flows on both sides are small relative to the aum maybe (1-2%) so it’s never over or that far back if you think about it

— Eric Balchunas (@EricBalchunas) May 17, 2024

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