Bitcoin ETFs Not Responsible for Recent Price Drop, Says Bloomberg Analyst
Bloomberg ETF analyst Eric Balchunas has stated that Bitcoin ETFs are not to blame for the significant price drop that Bitcoin (BTC) experienced this month. Despite reaching a multi-year high of $49,000 on January 11, the launch of several U.S.-based Bitcoin spot ETFs on the same day seemed to mark a local top for the asset, resulting in an 18% decline. However, Balchunas believes that the launch of these ETFs has been highly successful and has had a positive impact on price action. He points out that even with the Grayscale Bitcoin Trust (GBTC), ETFs have still been net buyers of over $1 billion since the dumping began.
Outflows from GBTC Following Conversion into Spot ETF
The Grayscale Bitcoin Trust (GBTC), which is the largest and longest-standing U.S. spot Bitcoin fund, has experienced significant outflows since converting into a spot ETF. Before conversion, GBTC shares traded at a substantial discount compared to Grayscale’s underlying Bitcoin holdings, reaching over 40% early last year. Many investors took advantage of this discount and profited when it was restored to parity after the fund became an ETF. However, now many of those buyers have chosen to cash out, including FTX bankruptcy. On Monday, Grayscale recorded its largest daily outflow ever at $640 million, surpassing inflows to all other U.S. Bitcoin ETFs combined.
The Positive Side of Bitcoin ETFs
Despite these outflows, net flows to all Bitcoin ETFs remain at $1.07 billion over their first seven trading days. When factoring in outflows from other Bitcoin ETF products like ProShares, Purpose, and European ETPs, these funds have earned $721 million. This information comes from BitMEX Research. Additionally, the total money held within U.S. Bitcoin ETFs has already exceeded that of silver ETFs, making Bitcoin the second-largest ETF commodity in the country. While Grayscale still dominates rival funds, newly launched ETFs from BlackRock, Fidelity, and others now hold 20% of Grayscale’s total BTC. These funds also have significantly lower management fees compared to Grayscale.
Bitcoin Continues to Outperform Equities and Bonds
Despite the recent price drop, Bitcoin is still up 75% over the past 12 months, outperforming equities and bonds. This indicates that despite short-term volatility, Bitcoin remains a strong investment option for long-term growth.
Hot Take: Bitcoin ETFs Not Responsible for Recent Price Drop
Bloomberg ETF analyst Eric Balchunas has defended Bitcoin ETFs against claims that they are responsible for the recent price drop in Bitcoin. Balchunas argues that the launch of these ETFs has been successful and has had a positive impact on price action. He points out that even with outflows from GBTC, ETFs have been net buyers of over $1 billion since the dumping began. Instead, Balchunas suggests that other factors within the crypto market should be blamed for the decline in Bitcoin’s price. Despite this setback, Bitcoin continues to outperform equities and bonds, making it a promising investment option for long-term growth.
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