**Record-Breaking Demand for Bitcoin ETFs: Whoโs Investing?**
Record-breaking volumes and flows for Bitcoin spot ETFs have demonstrated an incredible demand for these recently approved investment vehicles. However, there are differing perspectives on who is driving this demand.
CoinSharesโ Head of Research, James Butterfill, believes that the demand is predominantly institutional and not from the retail market. He points out that the Registered Investment Advisor (RIA) market has just started opening up to ETFs, suggesting that the majority of ETF flows in the US are from institutional investors.
On the other hand, Bitwise CIO Matt Hougan believes that there is a mix of investor types driving the demand, including retail investors, hedge funds, and independent financial advisors. He notes that new ETFs are not immediately available at major broker-dealers and securities houses upon launch, indicating that most of the current demand comes from retail investors, independent advisors, and hedge funds.
Hougan predicts that there will be an even bigger wave of demand in the coming months as major wirehouses like Morgan Stanley and Merrill Lynch start offering Bitcoin ETFs. These wirehouses are currently blocking clients from accessing these investment products. Vanguard, the worldโs second-largest asset manager, also blocks access to Bitcoin ETFs due to its investment philosophy.
With daily volumes for Bitcoin ETFs exceeding $7.7 billion and net flows reaching over $673 million on Wednesday, pressure is mounting on wirehouses to onboard these ETFs soon. Bloomberg ETF analyst Eric Balchunas suggests that recent ETF flows represent natural demand for BTC rather than algorithmic buying. He believes that wirehouses will have to expedite their adoption of Bitcoin ETFs due to grassroots demand.
However, Butterfill argues that it is difficult to estimate the total number of trades taking place and suggests that they may be disaggregated to assist in placing trades.
Macro investment analyst Jim Bianco compares Bitcoinโs recent pump to the retail-based GameStop frenzy in 2021. He notes that the average Bitcoin ETF trade size is roughly $13,000, while the average trade sizes for SPY and QQQโtwo popular ETFsโare approximately 10 times larger. This suggests a significant retail component to the investment base.
Balchunas disagrees with this analysis, stating that Bitcoin ETFs are not yet available on big advisor platforms and that some trades were sizable. He emphasizes that this is ETF retail, not GameStop retail.
In conclusion, the demand for Bitcoin ETFs is coming from a mix of institutional investors, retail investors, hedge funds, and independent financial advisors. While institutional investors may currently be driving the majority of demand, there is a growing interest from retail investors as well. The pressure is mounting on wirehouses to offer Bitcoin ETFs to meet the increasing demand. However, it is essential to note that these investment vehicles are still not universally accessible due to restrictions imposed by major players in the industry.
**Hot Take: Whoโs Driving Demand for Bitcoin ETFs?**
The recent surge in demand for Bitcoin spot ETFs has raised questions about who is investing in these investment vehicles. While perspectives vary among analysts, it is clear that both institutional and retail investors are contributing to this record-breaking demand.
โ CoinSharesโ Head of Research believes that institutional investors are primarily driving the demand for Bitcoin ETFs. The recent opening up of the Registered Investment Advisor market to ETFs suggests that these investment vehicles are attracting significant institutional flows.
โ On the other hand, Bitwise CIO argues that there is a mix of investor types contributing to the demand. Retail investors, hedge funds, and independent financial advisors are all showing interest in Bitcoin ETFs.
โ Major wirehouses like Morgan Stanley and Merrill Lynch have yet to offer Bitcoin ETFs to their clients. However, as demand continues to soar and daily volumes reach new highs, these wirehouses may have to expedite their adoption of these investment products.
โ Despite restrictions imposed by some major players in the industry, such as Merrill Lynch and Vanguard, the demand for Bitcoin ETFs remains strong. Retail investors are particularly interested in these investment vehicles, as evidenced by the size of individual trades.
โ It is important to note that the total number of trades taking place is difficult to estimate accurately. However, the increasing volumes and flows indicate a growing interest in Bitcoin ETFs.
In conclusion, both institutional and retail investors are driving the demand for Bitcoin spot ETFs. While institutional investors may currently dominate the market, there is a significant retail component contributing to the record-breaking volumes and flows. The pressure is mounting on wirehouses to offer these investment vehicles to meet the growing demand.
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