- Analysts have downplayed the long-term positive impact of the US BTC ETF.
- Instead, the analyst viewed the BTC ETFs as a benefit to TradFi and a threat to DeFi.
Bitcoin [BTC] rose from around $40,000 to a new high of $73.7,000, thanks to the adoption of US spot BTC ETFs.
The massive flows from institutions through the ETFs have long been seen as a bullish catalyst for BTC’s price action.
However, Jim Bianco, a macro investment research analyst, downplayed the ETFs’ “bullish” catalyst story.
Instead, Bianco called the BTC ETFs “taking the money off-chain” to TradFi, especially in the first quarter.
“My other concern was that these instruments (ETFs) would not lead to on-chain adoption, but would instead drag money back into the TradFi world. $COIN’s first-quarter earnings gave indications that this could be the case. Coinbase revenue soars to $1.64 billion – but store volume is only 50% of 2021 levels”
According to Bianco, the BTC ETF trend in the first quarter caused “money to be sucked off-chain into the Tradfi world,” which could undermine a new DeFi system.
Bianco’s Bearish View on US Bitcoin ETFs
Bianco’s bearish stance on the US BTC ETF contradicted the views of Michael Saylor and Bitwise CIO Matt Hougan.
For his part, Michael Saylor considered US BTC ETFs as one way to move capital from TradFi into digital assets, strengthening BTC’s competitiveness.
Similarly, based on the 13F filings, Hougan noted that large companies bought $10.7 billion worth of U.S. BTC ETFs in the first quarter. For Hougan the amount was a ‘deposit‘, and he expected more to come.
Bianco, however, took a contrarian stance and cited two other factors for his argument. Notably, investment advisors’ investments in BTC ETF in the first quarter were below average, fueling the bullish catalyst story.
“They (investment advisors) are very small, between 2.5% and 4% (and 8.81% for $GBTC). A recent report from Citi shows that the AVERAGE ETF is approximately 35% owned by investment advisors.”
Source: X/Jim Bianco
He also claimed that BTC ETFs are not registering huge demand as expected, and that the long-term impact of BTC ETFs could have been far-fetched.
“In any case, it is concerning that the headlong rush into Spot BTC ETFs “only” drove this price back to the old high (of November 2021) and not to $100,000.”
In the meantime, BTC’s short-term recovery eased near the sub-$68,000 supply area. Should the bulls overcome the hurdle, a sustained recovery to the range-high of $71,000 could be feasible.