It’s beginning to dawn on some people that spot ETFs won’t be a white knight for the bitcoin market.
We’re midway through the fourth day of bitcoin ETF trading and the results aren’t anywhere near the +$2 billion the bitcoin bulls were touting in the first 48 hours. The path to a net +$15 billion by year-end or the $100 billion touted by Standard Chartered has considerably dimmed as well.
There are people who want to argue that these ETFs are a great triumph because they are better than the hundreds of ETFs launched annually that are dead-on-arrival but that’s not the bar for success is high in light of a rally in BTC from $28K to $49K on the ETF hype.
So far, the only trade has been money cycling out of the high-fee GBTC and futures-based BITO into the new lower fee ETFs. Net of GBTC, here are the inflows:
- Day 1 +625.8m
- Day 2 +193.1m
- Day 3 -81.0m
So just three days in we’re already at net outflows and that doesn’t even include BITO, whose AUM is down around $300m.
For instance, ARKK itself sold its BITO holdings to buy its own ETF yesterday. That flatters its own ETFs performance but it also masks the lack of real demand.
What’s insane to me is that no one in the bitcoin space will call it what it is. There is such an echo-chamber built up around the space that there’s no room for rational analysis.
The thing is, people are getting hurt here by those touting some kind of great success from $600m dollars into an $800 billion market. Others are shamelessly extrapolating inflows from the first two days of trading to infinity to make a bullish case. That’s ridiculous as the long history of modern ETF launches shows that the first two days are like the weekend box office of a movie.
I don’t you need to look beyond volumes to paint a more-accurate picture:
Volumes in Blackrock’s IBIT ETF (lower)
Now maybe the caveat here is that price has been falling so inflows aren’t happening. That’s fine, they will come at some point but I just don’t see a path to $100B in net AUM here.