Bitcoin ETFs Could Trigger Short-Term Hype Cycle: Bloomberg Analyst
The surge in demand for bitcoin from the newly launched exchange-traded funds in the U.S., coupled with the decreasing available supply, could trigger a short-term hype cycle for the digital asset, said Bloomberg Senior ETF Analyst Eric Balchunas. He explained that as more people trade and hold bitcoin through ETFs, the available supply decreases, leading to increased demand and higher prices.
Currently, bitcoin spot ETFs have already seen inflows of $7 billion within just one month, exceeding Balchunas’ initial estimate. If this pace continues, it could result in inflows of around $150 billion over the year, a tenfold increase from his prediction. However, Balchunas expressed caution about sustaining these high levels of inflows and warned that rising bitcoin prices might be unsustainable.
Understanding Bitcoin ETF Volume
Balchunas emphasized that volume is a crucial indicator for ETFs and can significantly impact asset flows over time. He stated that high volume tends to lead to higher asset flows and described volume as a coveted factor that needs to grow naturally.
Hot Take: The Future of Bitcoin ETFs
The increasing demand for bitcoin through ETFs has the potential to create a short-term hype cycle for the digital asset. As more investors trade and hold bitcoin through these funds, the available supply decreases, leading to higher prices and increased demand. Bloomberg Senior ETF Analyst Eric Balchunas warns that while the current inflows into bitcoin spot ETFs are impressive, sustaining this level may be challenging. Additionally, he questions whether rising bitcoin prices can be sustained in the long term without a correction period.
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