The Early Performance of Bitcoin ETFs Falls Short of Expectations
The newly launched bitcoin exchange-traded funds (ETFs) have shown early signs of success, but they have not lived up to the high expectations of crypto enthusiasts. These funds began trading on January 11 after receiving approval from the U.S. Securities and Exchange Commission. Both iShares (IBIT) and Fidelity Wise Origin (FBTC) ETFs have attracted over $1 billion in cash from investors in less than 10 trading days. However, reviews of the launches have been somewhat tepid, with analysts noting that the inflows have fallen short of optimistic expectations.
Bitcoin Price Falls After ETF Launch
Interestingly, the launch of these ETFs has had a negative impact on the price of bitcoin itself. Bitcoin rallied late last year in anticipation of the ETF approval, but its price has fallen since then. On the day of the ETF launch, bitcoin reached over $49,000, but it is currently trading below $41,000. This decline is disappointing for some investors who believed that the ETFs would act as a catalyst to drive bitcoin’s price to $100,000 by 2024.
ETF Launches: A Solid Start, But Not Spectacular
Aniket Ullal, head of ETF data and analytics at CFRA Research, describes the launches as “a solid start, but not spectacular.” He also explains that it was difficult to estimate how well the funds would perform before their launch due to uncertainty regarding initial demand. Ullal suggests that excluding the Grayscale Bitcoin Trust (GBTC), which has seen outflows since converting into an ETF, would make the flow data appear stronger.
Inflows and Trading Volume Show Promise
Although some new ETFs are trailing behind IBIT and FBTC, they are still experiencing inflows. Compared to other ETFs, the early inflows for these bitcoin ETFs have been quite substantial. Trading volume has also been strong, indicating that the funds have potential staying power in the market.
Considerations When Evaluating New ETFs
It is important to note that not all financial advisors can immediately invest in new ETFs upon their launch. Certain brokerage platforms have specific criteria, such as track record and trading volume, that need to be met before adding new funds. If bitcoin prices remain stable, there may be long-term demand for these ETFs as asset managers become more comfortable with them.
Hot Take: Bitcoin ETF Launches Fall Short of Expectations
The newly launched bitcoin exchange-traded funds (ETFs) have not had the groundbreaking impact that many anticipated. While these funds have attracted significant cash inflows from investors, they have fallen short of the optimistic expectations set by some analysts. Additionally, the launch of these ETFs has coincided with a decline in the price of bitcoin itself. Despite these setbacks, there is still promise in terms of inflows and trading volume for the new funds. It remains to be seen how these bitcoin ETFs will perform in the long run and whether they will live up to their potential as a catalyst for greater crypto adoption.
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