Expert Claims Bitcoin ETFs Remain Stable Despite Recent Outflows
The recent period saw U.S.-traded spot bitcoin ETFs witnessing a significant outflow of $1.2 billion between August 27 and September 6, marking the longest streak of outflows since the inception of these funds. Despite this, experts view this trend as a positive indicator of healthy growth within the market.
Eric Balchunas, a senior ETF analyst at Bloomberg, emphasized that such fluctuations are a common occurrence in the lifecycle of ETF categories, stating, “This is going to be two steps forward, one step back.” He highlighted that the nature of ETFs caters to both long-term investors and traders, resulting in fluctuating flows.
During this period, the funds experienced approximately $1.2 billion in outflows, representing around 3% of the total assets in the funds, which stood at $46 billion post-outflows, according to data from Farside Investors. Balchunas noted that a concerning figure would be closer to 15%-20%, indicating that the current outflow percentage is within a reasonable range.
In the initial two months of trading, the ETFs attracted substantial inflows totaling $12 billion. However, Bianco Research pointed out that the pace of inflows has decelerated in recent months, with only $4 billion of new investments over the following six months, including just $1 billion in the past three months. Balchunas emphasized the significance of managing outflows during challenging market conditions, praising the Bitcoin ETFs for their resilience in limiting outflows during turbulent times.
Balchunas further commended the ETFs for their role in supporting the stability of bitcoin prices, stating, “The [ETFs have] really done a good job keeping bitcoin out of the abyss.” He highlighted instances where the ETFs played a crucial role in preventing significant price declines for bitcoin in recent months.
In conclusion, the recent outflows from U.S.-traded spot bitcoin ETFs may appear concerning at first glance, but experts view this as a natural part of the market’s growth trajectory. The ability of these ETFs to navigate challenging market conditions and support the stability of bitcoin prices underscores their importance within the cryptocurrency ecosystem.
