Spot ETFs Fail To Ignite Bitcoin Growth – Analyst

The Spot Bitcoin ETFs have become a major headliner recently due to heightened levels of market inflows. According to data from SoSoValue, these ETFs have attracted over $5 billion in investments over the past three weeks coinciding with an impressive Bitcoin price rally of over 23%. However, amidst this euphoria, macro investment researcher Jim Bianco says these Spot ETFs have contributed no significant growth to the Bitcoin market. 

In a series of X posts on November 2, Bianco claimed the Spot Bitcoin ETFs despite their impressive inflow record do not attract any new investments to the underlying asset. Firstly, The analyst applauds the performance of these institutional funds some of which rank as the best-performing ETFs of 2024 following their launch in January.

However, Bianco highlights BTC has failed to surpass its all-time high value of 73,750 set eight months ago despite the Spot Bitcoin ETFs accruing over $12 billion in inflows since BTC within the same period. 

Rather than being less than 4% down from its ATH, the analyst explained that such high inflows should have since pushed premier cryptocurrency beyond the $100,000 mark especially considering other positive indicators such as Fed rate cuts, the halving, and public endorsement by Republican Presidential candidate Donald Trump. 

For context, Bianco references the Gold ETFs with a record of over $6 billion in inflows since March 13, resulting in a 25% increase in gold’s market price during that period. The market analyst postulates that this price growth can be attributed to the “new money” flowing into the Gold ETFs. However, recycled funds shifted from on-chain wallets or centralized exchanges account for the majority of the investments in Spot Bitcoin ETFs. 

Jim Bianco backs this theory with a report from Coinbase CFO Alesia Haas which highlighted a decline in the exchange’s bitcoin retail traders over the last few months. Furthermore, he also points to the average Spot BTC ETF trade of $16,000 compared to the average gold ETF trade of  $72,000 which is consistent with investments from wealth managers and institutions.

In conclusion, Jim Bianco states the Spot Bitcoin ETFs are not attracting any “new money” but merely circulating existing investments in Bitcoin, which he describes as a concerning trend that may grant traditional financial institutions (TradFi) more influence in the crypto market as against the ethos of decentralization.

Popular Bloomberg ETF analyst Eric Balchunas has issued a strong rebuttal to Bianco’s take on the Spot Bitcoin ETFs which he describes as merely “mental gymnastics”. Balchunas has lauded the performances of these ETFs which he believed have played a crucial role in driving Bitcoin’s price from $35,000 in January to the present market price of almost $70,000. The Bloomberg analyst describes the Spot Bitcoin ETFs as “powerful” due to their low cost, high liquidity, and association with an established brand name and advises against betting against them.

At the time of writing, BTC. continues to trade at $68,100 reflecting a 2.55% decline in the past 24 hours.

 Featured image from Blockzeit, chart from Tradingview