- Analyst have downplayed the long-term positive impact of the U.S. BTC ETF.
Instead, the analyst viewed the BTC ETFs as benefiting TradFi and a threat to DeFi.
As a crypto investor with some experience in the market, I’ve seen firsthand how the approval of U.S. spot Bitcoin ETFs has impacted the price of BTC. The surge from around $40K to a new all-time high of $73.7K was undeniably significant. However, I’ve also read Jim Bianco’s bearish take on the matter, and it’s worth considering his perspective.
The price of Bitcoin [BTC] surged from approximately $40,000 to reach a record high of $73,700 following the announcement of U.S. regulatory approval for trading exchange-traded funds (ETFs) based on Bitcoin.
Institutional investments flowing heavily into Bitcoin through ETFs have historically been considered a significant driver of price increases for Bitcoin.
Jim Bianco, a macro investment research analyst, expressed skepticism towards the ‘bullish’ outlook for Exchange-Traded Funds (ETFs).
As a researcher studying the digital asset market, I would describe Bianco’s perspective as referring to Bitcoin Exchange-Traded Funds (ETFs) as bringing funds from traditional finance (TradFi) onto the blockchain during the first quarter.
“Another issue I had in mind was the potential for ETFs (Exchange-Traded Funds) to hinder the adoption of on-chain transactions, instead drawing funds back into the traditional financial sector. The Q1 earnings report from $COIN provided some indication that this could be happening. Despite a significant revenue increase of $1.64 billion for Coinbase, retail trading volume only reached half of what it was in 2021.”
Based on Bianco’s perspective, the Q1 Bitcoin ETF movement drew funds from the decentralized cryptocurrency market into the traditional financial sector, potentially threatening the emergence of new Decentralized Finance (DeFi) systems.
Bianco’s bearish take on U.S. Bitcoin ETFs
Bianco’s pessimistic view regarding the US Bitcoin ETF contrasted with Michael Saylor and Matt Hougan’s optimistic standpoints.
Michael Saylor believed that the introduction of U.S. Bitcoin ETFs would facilitate the transfer of funds from traditional finance (TradFi) into the digital asset realm, thereby enhancing Bitcoin’s position in the market.
Based on the data from 13F filings, Hougan observed that large investors purchased approximately $10.7 billion worth of U.S. Bitcoin exchange-traded funds (ETFs) during the first quarter. In his perspective, this represented a significant initial investment, implying that further purchases could be anticipated.
Instead of “However, Bianco took a contrarian position and cited two other factors for his argument,” you could say “Bianco presented an opposing viewpoint, pointing to two additional reasons: first, investment advisors’ Q1 holdings of the Bitcoin ETF were below average, which might hinder the bullish narrative.”
Investment advisors typically hold a relatively modest position in the market, with fees ranging between 2.5% and 4%. It’s worth mentioning that for the Grayscale Bitcoin Trust ($GBTC), the fee is 8.81%. According to a recent report by Citi, the average Exchange-Traded Fund (ETF) has approximately 35% of its ownership held by investment advisors.
“He additionally expressed doubt that Bitcoin ETFs would generate the substantial demand forecasted, and the ultimate consequences of these ETFs for Bitcoin could have been overstated.”
As a researcher examining the recent surge in prices for Spot BTC ETFs, I find it troubling that this increase alone wasn’t sufficient to propel the price beyond its previous peak of November 2021, let alone reach the significant level of $100k.
During this period, Bitcoin’s price bounced back slightly close to the support level around $68,000. If buyers manage to surmount this obstacle, a more significant upward trend toward the high end of its current range at $71,000 may follow.
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2024-05-20 14:15