Expert and market researcher Jim Bianco recently expressed cautionary comments about the alleged risks of bitcoin spot ETFs. Bianco's insights shed light on the implications of these ETFs for the market and address specific concerns related to investor behavior.
Minimum participation in new bitcoin ETFs?
In a social network that invites reflection x.com/biancoresearch/status/1784678044411818241″ target=”_blank” rel=”noopener nofollow”>mail On x (formerly twitter), Bianco emphasized his growing concerns as more data becomes available. In particular, he expressed concern about the potential risks that bitcoin ETFs pose to the market.
Bianco highlighted that investment advisors (IAs) own a substantial portion, approximately 35%, of all ETFs. Surprisingly, their holdings represent less than 1% of the btc spot ETFs.. For Bianco, this revelation challenges the popular belief that “boomers are coming” to invest in these ETFs.
Bianco proceeded to describe btc spot ETFs as “orange FOMO poker chips,” which primarily appeal to small “paper-handed” traders, commonly known as “degens.”
These traders are believed to be approaching their breakeven point, which could trigger significant selling pressure for the world's largest cryptocurrency.
The expert cited a Citibank study indicating that investment advisors own a mere fraction of new btc ETFs, while their holdings in non-equity ETFs such as Gold (GLD) and tech Leaders Income (TLT) are significantly larger. at 22% and 40%, respectively.
Bianco's analysis suggests that wealth managers' holdings in bitcoin ETFs are virtually negligible, accounting for negligible rounding errors.
Sell pressure looms?
Another aspect that Bianco highlighted was the average trade size of btc ETF buyers, particularly retail investors. His observations indicate that the average trade size is significantly small, at just $14,000, less than half the size of the next smallest operation.
This pattern suggests that a significant portion of btc ETF holders are retail investors who may have a higher propensity to ride the momentum.
Ultimately, the fear lies in the fact that these retail investors, commonly known as “degen retailers,” are more likely to sell at the first signs of trouble, especially when the price of btc falls below its average purchase price of $58,000. .
Bianco drew attention to the possible consequences if btc were to trade below $58k, stating that historic information shows that traditional financial “degens” tend to sell.
In particular, as the price of btc approaches the average purchase price of these retail investors, net inflows to btc ETFs, excluding Grayscale's GBTC bitcoin ETF, begin to turn into outflows.
Bianco compared this scenario to a wildfire, where btc selling breaks out when the price falls below the average purchase price, potentially disrupting the market.
Bianco emphasized the need for an alternative to the traditional financial system by expressing support for the idea of ethereum and bitcoin ETFs as part of the digital age toolbox.
However, the researcher cautioned against relying solely on bitcoin ETFs as the “orange FOMO poker chip” that would attract “boomers” and cause a price surge, as was the narrative during btc's March spike, when he tickets They were also rising in the ETF market. Bianco argued that this approach would hinder the main goal of establishing a robust digital financial system.
While Bianco recognizes the merits of bitcoin ETFs as As part of a broader picture of digital finance, it urges caution to ensure that it does not become a speculative tool that detracts from the overall goal of building a resilient financial ecosystem.
At the time of writing, btc is trading at $62,500, down 2% in the last 24 hours and down more than 5% in the last seven days.
Featured image from Shutterstock, chart from TradingView.com
