"So, it has been the degens all along"
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Billions of dollars have rushed into spot bitcoin ETFs since January, and a few smart folks in traditional finance (TradFi) have been somewhat skeptical of the narrative that all of that money represented pent-up demand from institutions.
- Recent comments from a BlackRock executive and a JPMorgan Flows & Liquidity report validated that doubt.
Why it matters: Those ringing the alarm on what set of investors — retail or institutions — own bitcoin ETFs worry that the former will spark a selloff when breakeven is reached.
Behind the scenes: "Retail Degens are paper-hands and will sell when they start losing money, more so than TradFi, which historically is a much stronger-handed ETF buyer," Jim Bianco of the eponymous financial services firm said on social media.
- The average purchase price for spot bitcoin ETFs is around $61,000, he added.
Zoom in: Meanwhile, a JPMorgan report by global markets strategist Nikolaos Panigirtzoglou suggested that of the $25 billion seen going into spot bitcoin ETFs and implied flows by CME futures, only about half, or $12 billion, was new money.
- This was assumed based on CryptoQuant's estimated $13 billion decline in digital wallets since the launch of spot bitcoin ETFs.
- "This implies that the majority of the $16bn inflow into spot bitcoin ETFs since launch likely reflects a rotation from existing digital wallets on exchanges," Panigirtzoglou said.
Flashback: BlackRock executive Samara Cohen, at the Coinbase summit in New York last week, said about 80% of bitcoin ETF purchases have likely been coming from self-directed investors who made their own allocations.
Yes, but: Spot bitcoin ETFs account for a small slice of outstanding bitcoin supply, or under 5%, according to a Dune dashboard by Dragonfly's Hildebert Moulié.
- Crypto natives on social media also pointed out that there is not an absolute 1:1 relationship between exchange and ETF flows.
The bottom line: Bianco isn't a hater, he just doesn't think an ETF is the answer: "The movement from on-chain to regulated brokerage accounts is a big problem in the long run," he said. "What BTC needs is on-chain adoption."
