Spot Bitcoin ETFs have been in the headlines recently due to high levels of market flows. according to Data from SoSoValueThese ETFs have attracted more than $5 billion in investments over the past three weeks coinciding with an impressive rise in Bitcoin prices of more than 23%. However, amid the euphoria, macro investing researcher Jim Bianco says these spot ETFs have not contributed any significant growth to the Bitcoin market.
Spot Bitcoin ETFs do not bring in any new money, only recycled investments
In a Series of posts On November 2, Bianco claimed that spot Bitcoin ETFs despite their impressive flow track record are not attracting any new investments into the underlying asset. First, the analyst praised the performance of these institutional funds, some of which were rated as the best-performing ETFs of 2024 after their launch in January.
However, Bianco highlights Bitcoin’s failure to surpass its all-time high of 73,750 set eight months ago despite spot Bitcoin ETFs accumulating more than $12 billion in inflows since Bitcoin over the same period.
Instead of being less than 4% of ATH, the analyst explained that such high inflows should have since pushed the major cryptocurrency beyond the $100,000 mark, especially given other positive indicators such as Federal Reserve interest rate cuts,… Interest rate halving, and public support by the Republican presidential candidate. Donald Trump.
For context, Bianco points to gold ETFs that have recorded inflows of more than $6 billion since March 13, resulting in a 25% increase in the gold market price during that period. The market analyst assumes that this price growth can be attributed to the influx of “new money” into gold ETFs. However, recycled funds moved from on-chain wallets or centralized exchanges account for the majority of investments in spot Bitcoin ETFs.
Jim Bianco supports this theory with a report from Coinbase CFO Alesia Haas that highlighted the decline in Bitcoin retail traders on the exchange over the past few months. Furthermore, it also indicates the average trading of the spot BTC ETF of $16,000 compared to the average trading of the gold ETF of $72,000, which is consistent with investments from wealth managers and institutions.
In closing, Jim Bianco stated that spot Bitcoin ETFs are not attracting any “new money” but are only trading existing investments in Bitcoin, which he describes as a worrying trend that may give traditional financial institutions (TradFi) more leverage in the cryptocurrency market versus Spirit of decentralization.
Bloomberg analyst responds to criticism of BTC ETF
Bloomberg’s famous ETF analyst Eric Balchunas Issued It is a strong response to Bianco’s stance on spot Bitcoin ETFs, which he described as mere “mental exercises.” Balchunas praised the performance of these ETFs, which he believes played a crucial role in driving the price of Bitcoin from $35,000 in January to its current market price of around $70,000. A Bloomberg analyst describes Spot Bitcoin ETFs as “strong” 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. It continues to trade at $68,100, reflecting a 2.55% decline over the past 24 hours.
Featured image from Blockzeit, chart from Tradingview