10 minutes on bitcoin ETFs

Friends and associates,

I enjoyed this recent 10-minute conversation with Jimmy Moyaha regarding bitcoin ETFs.

5 take-home points from our conversation:

1. The Bitcoin ETF's have provided monumental regulatory and institutional validation for the asset class

   

2. ETF demand is 4X daily new bitcoin supply and supply growth halves in April 2024 (net flows have slowed in recent days but apart from on-going outflows from GBTC, there have been hardly any outflows from the other ETFs)

   

   Source: Farside

3. ETFs could dampen volatility, particularly when options are launched, but sharp drawdowns should still be expected

4. Bitcoin has recently hit a new all-time high (ATHs) at $70K, but historically strong performance is still probable after ATHs. The reality is that higher prices grab attention, encouraging more demand

   

5. We must remain mindful of centralisation risks within ETF custodians, but current ETF holdings of bitcoin are tiny and unconcerning

Bottom-line: Prices could certainly weaken from current levels, flushing leveraged speculators out of the market, but we remain constructive on the outlook over the coming months, unperturbed by the GBTC outflows and ATHs.

Rob Price, CFA

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