Bitcoin may be slumping these days but the advent of ETFs for the top cryptocurrency is a game changer that is only getting started.
Indeed, the funds offered by BlackRock’s iShares unit, Fidelity, and Ark Investment may collectively double in size, to more than $100 billion in assets, by the first quarter of 2025.
That’s the take from Brian Evans, the CEO BDE Ventures, an investment firm that backs web3, DeFi, and blockchain startups.
“I could see the total amount of capital held in these US-based BTC ETFs possibly doubling by the end of the year or going into early next year,” Evans told DL News.
Bitcoin at $100,000
To hit the $100 billion mark, the price of Bitcoin would have to reach the $100,000 target by the end of the third quarter, he said.
Bitcoin stabilised after dropping almost 10% in the last seven days as investors braced for the Federal Reserve’s committee meeting Wednesday.
The Fed signalled that interest rates will not be cut anytime soon because a robust US economy is raising the risk of a resurgence in inflation.
A fragile market
Investors’ demand for Bitcoin ETFs has dropped in recent weeks as the macro story turns against “risk-on” assets including equities and crypto. The market has turned fragile since the giddy highs following the listing of the funds in January.
Cumulative flows to Bitcoin ETFs have dropped almost 8% in the last two and a half weeks, to 11,254 Bitcoin daily, according to data from Farside Investors.
But the crypto investing cycle has been forever changed by the funds and this will play out in the long run, analysts say.
Institutional investors in the wings
In the past, financial institutions have hesitated to throw money behind cryptocurrencies and opted instead to invest in the development of blockchain technology itself.
That kept a lot of capital on the sidelines.
Demand from institutional investors has been slow in the last five months. It was retail investors who truly drove Bitcoin to an all-time high above $73,000 on March 14.
Yet spot price Bitcoin ETFs are so liquid to trade that they are bound to become more attractive to institutional investors, market experts say.
New money
And the regulated products are issued by some of Wall Street’s biggest firms, which should ease concerns about their safety.
The next chapter will hinge on investment advisers, who influence the ebb and flow of capital into the markets.
They are likely to start allocating their clients’ assets into Bitcoin ETFs as part of portfolio diversification, Brian Rudick, senior strategist at trading firm GSR, told DL News.
When that happens, a new inflow of money will bolster Bitcoin’s price.
“This is likely to be a slow process that plays out over the next few years, but it will be extremely powerful, much stickier, and amount to steady buy demand,” Rudick said.
Crypto market movers
Bitcoin rose by 1.7% in the past 24 hours and is trading at $57,756.
Ethereum jumped 3.2% to $2,927.
What we’re reading
Traders bet on a rocky Fed day — here’s how low Bitcoin is seen going — DL News
Tether (USDT) Achieves Historic Q1 2024 Profit Of $4.52 Billion — Milk Road
Schonfeld Latest Wall Street Player to Make Push Into Bitcoin, Ether Options — Unchained
SEC Chair Gensler Accused Of Misleading Congress On Ethereum Classification — Milk Road
Hundred Finance’s $7.4 million stolen last year starts to move — DL News
Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.
