US Bitcoin ETFs Threaten On-Chain Liquidity, Fails to Draw Baby Boomers
Summary:
Concerns rise about U.S. Bitcoin exchange-traded funds (ETFs) pulling on-chain liquidity into traditional finance (TradFi), potentially stalling the move toward a decentralized financial system, according to macro researcher Jim Bianco. Despite hopes of attracting Baby Boomers, data suggests they hold less than 5% of spot Bitcoin ETFs, and over 85% of underlying Bitcoin is held by retail investors. The shift poses questions about Bitcoin's role as an alternative to the fiat fiscal system. Net flows for Bitcoin ETFs, however, turned positive in early May after a three-week slump.
Bitcoin exchange-traded funds (ETFs) in the U.S., which were expected to attract more baby boomers, may instead impede on-chain adoption and liquidity. Jim Bianco, founder of Bianco Research, expresses concerns in his May 19 X post that these ETFs might be diminishing on-chain liquidity. He stated that moving money into traditional finance (TradFi) in the guise of orange FOMO poker chips stalled the advancement towards a decentralized financial system. Amid this forewarning, the Bitcoin (BTC) price is perched under a critical resistance level this week. A breakthrough above $67,500 could see it reach new record highs, according to Markus Thielen, Head of Research at 10x Research. Contradicting the anticipated adoption growth, ETFs seem to be channeling on-chain liquidity into the TradFi realm; Q1 financial results from Coinbase reflect this trend. Despite revenue reaching $1.64 billion, the retail trading volume was only half that of 2021, while institutional trading volumes rose to $256 billion from Q1's $215 billion the previous year. This could indicate a shift in Coinbase's focus to institutional growth to compensate for retail trading decreases. Such findings prompt a difficult consideration for Bitcoin as a decentralized alternative to the fiat fiscal system. And despite expectations, ETFs have not successfully attracted baby boomers; over 85% of underlying BTC is held by retail traders, leaving only 10% in the hands of hedge funds. Data suggests less than 5% of the spot BTC ETFs are held by baby boomers. Bitcoin ETFs in the U.S. observed a turn of positive net flows in the week commencing May 6 after three weeks of net negative outflows, amassing over $200 million in cumulative net inflows during the week, as per Dune data. Coincidentally, the average buying price of spot Bitcoin ETFs dropped between $58,000 to $59,000 when Bitcoin plunged under the $60,000 mark, signaling retail traders primarily fueling these fluctuations. By February 15, Bitcoin ETFs made up approximately 75% of the global cryptocurrency's new investment, as it broke over the $50,000 threshold.
Published At
5/20/2024 2:43:09 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.