Ah boy. Spot Bitcoin ETFs are facing a significant downturn.
Just recently, everyone was all about these new, shiny financial vehicles, but the tune has changed. Now, they’re hardly keeping pace with the mass exodus of funds, especially from the big players like Grayscale’s Bitcoin Trust (GBTC), which saw 1,766 bitcoins walking out the door in just one week as of April 12.
Cooling Off
This decline isn’t a fluke. Trust me.
Even Fidelity’s Wise Origin Bitcoin Fund, which began trading on January 11, couldn’t dodge the bullet. After months of daily gains, the fund reported zero new inflows last Friday and Monday. That left BlackRock’s iShares Bitcoin Trust as the sole survivor still seeing some action, although just barely hanging on.
Most other funds aren’t faring any better. Invesco Galaxy Bitcoin ETF, VanEck Bitcoin Trust, Valkyrie Bitcoin Fund—you name it, they’re all in the same sinking boat with no new money coming in and bits and pieces going out now and then.
According to James Seyffart, an ETF analyst at Bloomberg Intelligence, this trend of zilch inflows isn’t limited to Bitcoin ETFs. It’s a scene across 83% of all ETFs in the U.S. market. Seyffart pointed out that usually, the creation and redemption of shares in these funds happen only when there’s a significant mismatch in supply and demand, and lately, that hasn’t been the case. The trading of shares is being handled more like typical stocks due to only minor discrepancies in these Bitcoin ETFs.
Outlook
Despite the current stagnation, not everyone believes this is the end of the road. Samir Kerbage, chief investment officer at Hashdex, suggests there’s a light at the end of the tunnel. After Hashdex transformed its Bitcoin futures fund into a spot Bitcoin ETF this March, Kerbage sees potential for a bounce-back.
He told CoinDesk that believes that as major financial institutions wrap up their assessments of these new investment avenues, there could be a significant uptick in interest and investment.
Yet, over at Grayscale’s Bitcoin Trust, the outflow continues unabated, with more than 1,000 bitcoins leaving daily. Seyffart is less than optimistic about any sudden changes in fortune, especially with GBTC’s relatively high expense ratio of 1.5%.
Adding to the skepticism is Robert Kiyosaki, author of “Rich Dad, Poor Dad,” who openly declared his disinterest in spot Bitcoin ETFs and similar Wall Street offerings on April 12. A renowned supporter of direct ownership over financial products, Kiyosaki prefers to invest in tangible assets like gold, silver, Bitcoin, and real estate, which he considers real bargains.
Meanwhile, despite the doom and gloom surrounding specific funds, the broader market for Bitcoin ETFs is still hitting record highs. Tokenization of real-world assets is gaining momentum, and as per CoinShares, the overall sector saw a $646 million influx on April 8 alone, with a whopping $13.8 billion coming in year-to-date—the highest ever.
So, what’s next for Bitcoin ETFs? Let’s watch and see, I guess.
