Bitcoin ETFs smashed records with a 14,261 bitcoin purchase on March 12 as a former Swiss Bank Director shed light on the changing Bitcoin ETF investment scene.
On March 12, Bitcoin ETF net inflows surpassed $1 billion, with Blackrock’s IBIT product reaching a record inflow of $849 million and surpassing 200,000 BTC in assets under management, according to reports.
The latest surge in trading activity eclipses the initial enthusiasm seen at the ETFs’ inception and sets a new benchmark for market engagement.
In a March 14 interview with Crypto.news, Clive Thompson, a retired wealth management managing director with decades of experience in Swiss private banking, shared his insights into the cryptocurrency market following the historic launch of Bitcoin Exchange Traded Funds (ETFs ) on Jan. 11, 2024. The launch of these ETFs, including the high-profile conversion of Grayscale’s Bitcoin Trust into an ETF, is an important milestone in the evolution of Bitcoin as an asset class.
“Bitcoin has become an asset class that can no longer be ignored,” Thompson said, highlighting the watershed moment when the US Securities and Exchange Commission (SEC) allowed the launch of 10 Bitcoin ETFs. This move, he notes, is not an endorsement of Bitcoin as an investment, but recognizes the undeniable demand for accessible exposure to Bitcoin’s price.
The ETF launch was historic, pulling in more than $700 million on its first day, the highest ever for an ETF. Although Grayscale saw some early losses due to higher fees, the situation quickly improved, resulting in more than $11 billion invested in Bitcoin through these ETFs since their inception.
What makes this development even more significant is the growing adoption of Bitcoin ETFs among investment firms worldwide. “Investment firms around the world are under pressure from their relationship managers to include the Bitcoin ETFs as an authorized investment,” Thompson explained. He delves into the rigorous approval process within these firms, stressing that despite the challenges, “little by little these ETFs are going to be approved.”
However, Thompson also cautioned that the journey to widespread adoption is not without its hurdles. He discussed the cautious approach that many asset allocators are likely to take, initially limiting exposure to a small percentage. Additionally, not all relationship managers are convinced to immediately include Bitcoin in client portfolios, waiting for a pullback before making a move.
Despite these challenges, Thompson remains optimistic about the future flow of funds into Bitcoin ETFs, driven by a combination of increasing adoption among investment firms and the powerful allure of Bitcoin’s rising price, which has a “fear of missing out” among investors created. Since the ETF launch, Bitcoin’s price has risen from $47,000 to an astounding $72,800, further fueling investment interest.
Looking ahead, Thompson predicts continued growth, but also cautions investors about the potential for volatility, driven by profit-taking and external risks such as government action or market events. Still, he believes in the resilience of Bitcoin, driven by factors such as the network effect and concerns about fiat currency devaluation.
On March 11th, just a day before the record ETF purchases, the new Bitcoin ETFs acquired around 7200 Bitcoins. This acquisition significantly exceeded the average daily mined supply of 900 Bitcoins, contributing to a 5% price increase in Bitcoin. Thompson’s observations underscore the profound impact of ETF activity on the market.
Furthermore, Thompson highlighted Genesis Holdings’ role after its bankruptcy and subsequent liquidation of GBTC shares, which begins on February 28 and ends around March 13. The liquidation indirectly affected Bitcoin sales, and according to Thompson, the closing of Genesis’ GBTC share sale represents a pivotal moment with potential implications for Bitcoin’s price trajectory, indicating a rally to new highs, which could lead to more inflows into Bitcoin ETFs. attract
“In the long term, I see much higher prices,” concluded Thompson, reflecting on the growing network of Bitcoin holders and the inflation of fiat currencies. “The fixed limit of 21 million bitcoins means that it cannot be printed willy-nilly like fiat currency can, making it a safeguard against what could happen to the currency.”
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