The recent surge in Spot Bitcoin ETFs has grabbed significant attention, fueled by an influx of over $5 billion in investments over the past three weeks and a substantial Bitcoin price rally of over 23%. Despite this optimistic backdrop, macro investment researcher Jim Bianco argues that these ETFs have not contributed to any meaningful growth in the Bitcoin market.
Bianco, in a series of posts on November 2, contended that although the Spot Bitcoin ETFs have shown impressive inflow figures, they have not attracted new investments to the asset. He praised the performance of these ETFs, some of which are among the best-performing funds launched in 2024, but pointed out that Bitcoin has not surpassed its all-time high of $73,750, set eight months ago, despite the ETFs amassing over $12 billion in inflows during the same period.
The analyst suggested that Bitcoin’s price should have soared past the $100,000 mark, driven by substantial inflows and other positive indicators such as Federal Reserve rate cuts, the Bitcoin halving event, and a public endorsement from Republican Presidential candidate Donald Trump. For context, Bianco compared the situation with Gold ETFs, which, after receiving over $6 billion in inflows since March 13, saw a 25% increase in gold’s market price. He attributed this growth to the influx of “new money,” unlike the Spot Bitcoin ETFs, which he claims are primarily funded by recycled investments from on-chain wallets or centralized exchanges.
Bianco supported his argument with a report from Coinbase CFO Alesia Haas, noting a decline in Bitcoin retail traders on the exchange in recent months. Additionally, he highlighted that the average trade size for Spot Bitcoin ETFs is $16,000, significantly lower than the $72,000 average trade size for Gold ETFs, indicating that the bulk of Bitcoin ETF investments might be coming from wealth managers and institutions rather than new individual investors.
Concluding his observations, Bianco stated that Spot Bitcoin ETFs are not bringing in “new money” but are merely recycling existing investments. He expressed concern that this trend could give traditional financial institutions (TradFi) more control in the crypto market, potentially undermining the decentralization ethos that defines the cryptocurrency industry.
Contrasting sharply with Bianco’s view, popular Bloomberg ETF analyst Eric Balchunas offered a robust defense of Spot Bitcoin ETFs. Dismissing Bianco’s assessment as “mental gymnastics,” Balchunas praised these ETFs for their role in propelling Bitcoin’s price from $35,000 in January to nearly $70,000 at present. He emphasized the power of Spot Bitcoin ETFs, citing their low cost, high liquidity, and strong brand associations, and warned against underestimating their impact.
As of now, Bitcoin continues to trade at $68,100, reflecting a slight 2.55% decline over the past 24 hours.
