Bitcoin ETF Dominates Global ETF Market With $17.5B Influx, Bitwise CIO Says

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As a seasoned researcher with over two decades of experience in financial markets, I must say that the growth of Bitcoin ETFs has been nothing short of astonishing. I’ve seen my fair share of market trends come and go, but this one seems to be setting records left and right.

Investment products tied to Bitcoin (Bitcoin ETFs) are rapidly gaining traction as the most sought-after Exchange Traded Funds, captivating a great deal of interest from institutional investors.

Starting from January 2024, these ETFs have experienced a staggering inflow of around $17.5 billion, surpassing the initial year’s record set by the Nasdaq-100 QQQs, which managed to attract approximately $5 billion during their first year.

Bitcoin ETF Dominates Global ETF Market With $17.5B Influx

Bitcoin Exchange Traded Funds (ETFs) have experienced an unprecedented rate of adoption, particularly among institutional investors. Matt Hougan, Bitwise’s Chief Investment Officer, pointed out in a recent discussion that these ETFs have attracted the swiftest-growing investments ever recorded. Since their debut, a massive $17.5 billion has flowed into them, setting a notable benchmark. This surpasses the previous record set by the Nasdaq-100 QQQs by a considerable margin.

It’s quite remarkable how quickly this is expanding, especially considering the lingering doubts among certain market players who assert that institutional involvement remains limited.

As a crypto investor, I can confidently say that Bitcoin ETFs are gaining traction among institutional investors at an unprecedented pace compared to any other ETF out there. Contrary to the narrative suggesting it’s merely retail investors involved, the facts speak for themselves – institutional interest in Bitcoin ETFs is undeniably on the rise.

A thread.

— Matt Hougan (@Matt_Hougan) August 21, 2024

One key concern raised about the effectiveness of these ETFs is the belief that they are heavily influenced by individual investors rather than institutional ones. Detractors refer to filings known as 13F, which reveal that in Q2 2024, institutions manage just 21% of the total assets within Bitcoin ETFs, with retail investors controlling the rest, approximately 79%.

Yet, Hougan’s analysis contradicts this storyline by benchmarking them against the 10 fastest-expanding ETFs historically launched. His results show that the initial ones are dominating in institutional adoption, either in terms of the quantity of institutions or the aggregate Assets Under Management (AUM).

Nasdaq-100 QQQs Institutional Adoption

Hougan drew a parallel between the acceptance of Bitcoin ETFs by institutions and that of the Nasdaq-100 QQQs, which had previously seen the highest inflows among ETFs. Although it’s difficult to make exact comparisons because of differences in time periods and access to historical data, Hougan points out that within their first two quarters, Bitcoin ETFs have attracted three times as many institutional investors as the QQQs did during a similar time period.

It indicates that there’s not just existing, but rapidly increasing enthusiasm about them within institutions.

As an analyst, I find it noteworthy that the cumulative inflow into Exchange-Traded Funds (ETFs) this year has reached $911 billion, indicating a strong possibility of surpassing last year’s all-time high of $1.2 trillion. This impressive growth is largely driven by increased contributions from non-US countries, accounting for nearly 40% of the total inflow, compared to just 25% in 2021. Moreover, the launch of a record-breaking 1,121 ETFs globally this year underscores the growing popularity and demand for these investment vehicles.

— Eric Balchunas (@EricBalchunas) August 21, 2024

At the same time, the increase in Bitcoin ETFs is linked to a larger pattern across the worldwide ETF market, which experienced unprecedented inflows throughout 2024. Eric Balchunas, an analyst from Bloomberg, noted that global ETF investments have totaled $911 billion so far this year, with these ETFs playing a substantial role in this growth spurt.

In particular, BlackRock’s IBIT has ranked third globally for the amount of investment it has received so far this year.

Bitcoin Price Outlook

Afterward, the emergence of Bitcoin Exchange-Traded Funds (ETFs) has mirrored larger movements within the cryptocurrency sector. Experts have pointed out a possible “short squeeze” in Bitcoin derivative markets, which might trigger a significant increase in BTC prices.

1. Improvement in the Fear and Greed Index and consistent investments into these ETFs indicate a generally optimistic market attitude, even as there remain economic and political doubts in the U.S. landscape.

Currently, when this news is published, Bitcoin’s price has bounced back and is being exchanged at $60,012, representing a 1.80% increase from its lowest point during the day.

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2024-08-21 21:19