Recent data shows that spot Bitcoin ETFs, particularly the iShares Bitcoin Trust (IBIT) from BlackRock, recorded zero net inflows on April 24—the first time since these funds launched in the U.S. in January. Does this mean institutional interest is fading?
Despite this, analysts from institutions like Standard Chartered remain optimistic. They argue that Bitcoin’s supply dynamics and growing global ETF accessibility could support significantly higher prices by year-end.
Here’s a closer look at the current market forces and what may lie ahead.
Understanding the Current ETF Flow Slowdown
The spot Bitcoin ETF market has shown remarkable growth since its introduction. BlackRock’s IBIT, for example, attracted billions within just 71 trading days. However, the trend has recently shifted.
On April 24, not only did IBIT see zero inflows, but the broader ETF market also experienced net outflows of $120.6 million. Grayscale’s Bitcoin Trust (GBTC) continued to see money leaving, with a single-day outflow of $130.4 million. Only two funds—Fidelity’s FBTC and the ARK 21Shares Bitcoin ETF—posted modest inflows.
This isn’t entirely unexpected. FBTC itself had multiple days with zero inflows over the past two weeks. Even with the recent slowdown, the cumulative net inflow for all U.S. spot Bitcoin ETFs remains positive at $12.3 billion.
Key Factors Influencing Bitcoin’s Performance
Beyond ETF flows, several macro and regulatory elements are affecting Bitcoin’s price trajectory.
Geopolitical Tensions and Macroeconomic Conditions
The escalating conflict between Iran and Israel triggered a sharp, though temporary, drop in Bitcoin’s price below $60,000. Contrary to the belief that Bitcoin acts as a safe-haven asset, it often behaves more like a risk asset—similar to tech stocks—in the short term.
Moreover, rising U.S. Treasury yields have made traditional investments more attractive, drawing some capital away from cryptocurrencies.
Regulatory Delays and Legal Challenges
Expectations for a spot Ethereum ETF have diminished recently. The SEC has delayed several approval decisions, including Grayscale’s Ethereum Trust application, pushing the deadline to June 23.
In addition, the agency’s lawsuit against Uniswap, a leading decentralized exchange, has added uncertainty to the crypto regulatory landscape.
The Impact of the Halving
Bitcoin’s fourth halving occurred in April, reducing the block reward for miners by half. This event slows the rate of new Bitcoin supply, which historically has led to price increases over time.
Combined with demand from ETFs, this supply shock could create a supportive environment for Bitcoin’s value.
Why Some Analysts Stay Bullish
Standard Chartered’s head of digital assets research, Geoffrey Kendrick, recently reaffirmed a positive outlook. He believes Bitcoin could reach new all-time highs and even double in value by the end of 2024.
His optimism is based on a few key points:
- Post-halving, the required inflow to offset new supply is much lower.
- The global ETF landscape is expanding, with new products expected in markets like Hong Kong and the U.K.
- Recent liquidations of leveraged long positions have made the market less crowded and more stable.
Kendrick also noted that many negative factors are already priced in, and positive structural trends may soon dominate.
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Frequently Asked Questions
What does zero inflow in a Bitcoin ETF mean?
Zero inflow means that on a given day, the fund did not attract new investor capital. This can indicate short-term caution but doesn’t necessarily reflect long-term sentiment.
How does the halving affect Bitcoin’s price?
The halving reduces the rate at which new Bitcoin is created. With lower supply and steady or growing demand, economic theory suggests the price may rise over time.
Are Bitcoin ETFs available outside the U.S.?
Yes, several countries, including Canada and Germany, have Bitcoin ETFs. Markets like Hong Kong and the U.K. are also progressing toward approving such products.
Why did Bitcoin drop during Middle East tensions?
Despite being considered a hedge in some cases, Bitcoin often correlates with risk assets like stocks during periods of geopolitical uncertainty, leading to short-term sell-offs.
What is the long-term outlook for Bitcoin according to analysts?
Some analysts, including those at Standard Chartered, predict Bitcoin could reach $150,000 by the end of 2024, citing structural supply and demand factors.
How do leveraged positions influence Bitcoin’s volatility?
Leveraged trades amplify price movements. Large-scale liquidations, such as the $261 million in long positions closed on April 13, can increase short-term volatility.
Conclusion
While recent spot Bitcoin ETF flows have slowed, the broader narrative remains nuanced. Positive structural factors—such as the halving, increasing international adoption of crypto ETFs, and a clearer market structure—suggest potential upward movement.
Investors should monitor regulatory developments, macroeconomic indicators, and institutional participation to make informed decisions. For those considering market entry, timing and risk management are essential.
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As always, market participants should perform their own research and consider their financial position before investing in volatile assets like Bitcoin.