The overwhelming demand for Bitcoin spot ETFs over the past two months is likely to continue for years to come, predicts Bitwise CIO Matt Hogan.
Earlier this month, the executive highlighted “key takeaways” from interactions with investors and capital allocators interested in purchasing ETFs managed by Bitwise.
In a post on Twitter, he recalled being reminded that “the pace of adoption of Bitcoin ETFs varies widely.” While some financial advisors and national account platforms are incorporating this product as soon as possible, others have not considered portfolio allocation for their clients or do not plan to enable it on their platforms until next year.
“The truth is, most professional investors cannot buy Bitcoin ETFs yet,” Hogan wrote. “This will change as he undergoes more than 100 separate due diligence processes over the next two years.”
Since its launch on January 11, the Bitcoin ETF has absorbed $11.7 billion in net inflows, despite factoring in more than $14.3 billion in legacy BTC outflows from the Grayscale Bitcoin Trust (GBTC). On Tuesday alone, another $418 million inflows occurred, including $16.7 million in the Bitwise Bitcoin ETF.
Brazil-based HashDex announced today that it will finally offer its Bitcoin Spot ETF online.
This flow of funds already represents significant progress compared to past years, when funds within institutional Bitcoin funds paled in comparison to today.according to cryptoquantthe metric has grown from less than $20 billion to more than $94.6 billion in the past six months as excitement about ETFs begins to take hold.
According to on-chain data, demand from “accumulation addresses” (Bitcoin addresses that only buy but never sell) is also rapidly increasing.
“We estimate that monthly Bitcoin demand has increased from 40,000 Bitcoins in early 2024 to 213,000 Bitcoins today,” said Julio Moreno, head of research at CryptoQuant. Decryption. “A significant portion of this demand growth has been driven by ETF purchases, but also recently by purchases by other large investors.”
Hogan also said that compared to past years, investors have moved away from the once ideal 1% Bitcoin portfolio share and now prefer 3% or more. The executive believes ETFs are to blame, as they are “de-risking” Bitcoin in the eyes of many.
“Before, people were worried that Bitcoin would go to zero. In that world, a 1% allocation is bearable,” he said. “But if 'going to zero' is off the table, then 3% or even 5% starts to make more sense.”
According to James Butterfill, head of research at Coinshares, most institutional investors remain “very underinvested” in Bitcoin, with an average share of just 0.2% of their portfolios.
“What proportion Bitcoin ends up being depends on your risk appetite,” Butterfill said. Decryption“For a regularly rebalanced portfolio, a 4% position is only 100 basis points of additional risk.”
Edited by Ryan Ozawa.
