Bitcoin ETF 'fever' gradually subsides

A series of US Bitcoin spot ETFs recorded no inflows, showing a decline in attractiveness in the eyes of investors.

According to CoinDesk ’s analysis team, the initial excitement around Bitcoin spot ETFs (a type of exchange-traded fund that invests primarily in Bitcoin) appears to have waned. This has affected recent inflows into the funds, with net purchases not keeping up with the pace of exits, such as in Grayscale’s Bitcoin Trust (GBTC).

As a result, all spot ETFs saw a net inflow of 1,766 Bitcoin (about $118.3 million) last week. Most funds, such as Fidelity’s Bitcoin Wise Origin (FBTC) and Invesco Galaxy Bitcoin ETF (BTCO), saw $0 in inflows. Net selling has become a common occurrence.

That leaves BlackRock's iShares Bitcoin Trust (IBIT) as the only one left with consistent inflows.

James Seyffart, an ETF analyst at Bloomberg Intelligence, said this was not unusual, as about 83% of funds in the US market had no capital at the beginning of each week.

He explained that the withdrawal and redemption of a spot ETF usually occurs when there is a large enough gap between supply and demand, and this has lower execution costs compared to other hedging measures.

"The volatility will cause the market leaders to trade fund certificates the way they do stocks," he added.

However, the recent cooling does not mean the market has to get used to smaller flows into Bitcoin ETFs. Many analysts believe that this investment channel still has potential in the future.

Samir Kerbage, chief investment officer at Hashdex, which converted its Bitcoin futures fund into a Bitcoin spot ETF in March, said “there is definitely potential for a resurgence of inflows.”

According to him, many banks, endowments and pension funds around the world are just starting to do due diligence before considering allocating capital to Bitcoin through newly launched ETFs. As these major financial institutions make decisions in the coming months, net capital will increase again and reach new milestones.

“Bitcoin spot funds will be one of the most successful ETF launches in US history,” he predicted.

Since early April, the world’s largest cryptocurrency has mostly traded below $70,000 a unit. Since the weekend, the currency has hovered around $63,000, down 15% from its record high.

In addition to tensions in the Middle East, the market is turning its attention to Bitcoin halving - a four-year event that reduces the reward for miners by half. The event is expected to take place in mid- to late April, and is expected to help limit supply, thereby stimulating the market price into a new growth phase.

Xiao Gu (according to CoinDesk )

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