Bitcoin’s The significant decline from the record price of over $126,000 in October last year has darkened sentiment across the crypto industry. Faith is wavering in the trade, which is seen as a digital rival to gold as a store of value and a risk-on asset that continues to grow rapidly with the crypto-friendly Trump administration.
Bitcoin has lost nearly half its value since its all-time high in October last year and has been unable to recover in trade, raising fears of another “crypto winter.” This is a prolonged slump similar to the 2022 FTX crash, when Bitcoin fell from nearly $50,000 to $15,000. In the past month alone, Bitcoin has fallen by more than 25%.
However, crypto investment experts on the latest CNBC “ETF Edge” say recent inflows and outflows to Bitcoin and crypto exchange funds suggest that long-term investors are not abandoning the asset class. While money is certainly outflowing, it hasn’t reached a level that would suggest panic among long-term investors.
In the last 3 months iShares Bitcoin Trust (IBIT) There was a net outflow of approximately $2.8 billion. That’s a lot of money, but VettaFi says the BlackRock ETF has had nearly $21 billion in net inflows over the past year. The broader spot Bitcoin ETF category shows a similar pattern. Over the past three months, the ETF asset class has seen net outflows of approximately $5.8 billion. Over the past year, all Spot Bitcoin ETFs have had positive net inflows of $14.2 billion. While money has been flowing out, the bulk of the assets remain, and some ETF experts say the money being withdrawn isn’t coming from long-term investors or financial advisors who started allocating to the asset class.
Matt Hogan, chief investment officer at Bitwise Asset Management, said of ETF Edge, “It’s not the ETF investors who are driving the selling.”
He said much of the broader pressure on Bitcoin may be coming from crypto investors who have accumulated positions over the years and are now reducing their exposure. “This is really a story of two sides,” Hogan said. He also said there are hedge funds and short-term traders who use the most liquid ETFs as a tool and can quickly withdraw their money if momentum turns negative.
At last week’s CNBC Digital Finance Forum, Galaxy CEO Mike Novogratz said the “age of speculation” in the crypto market may be over, and future returns will be more akin to long-term investment holdings. “It’s going to be a real-world asset with a much lower return,” he said at a CNBC event in New York City last Tuesday. “Retailers don’t get into cryptocurrencies because they want to make 11% a year,” he said. “They come in because they want to win 30-1, 8-1, 10-1.”
Some financial advisors at Wall Street banks are adding Bitcoin or private-label crypto ETFs to their investors’ portfolios. And long-term investors who hold cryptocurrencies as a small allocation within a diversified portfolio may be willing to ride out the volatility, Hogan said. If investors capitulate across the board, the amount of capital outflows over the past three months is likely to approach the amount of capital inflows over the past 12 months.
ETF asset flow analysis is not an easy time for crypto investors these days. “It’s hard to be a Bitcoin investor at this point,” Will Lind, founder and CEO of ETF company GraniteShares, said on “ETF Edge.” He added that the performance of other “hard” assets is also important, such as: goldadding to Bitcoin’s woes. For investors who have supported the idea of ”digital gold,” the collapse in Bitcoin prices is causing anxiety. “This shouldn’t happen,” he said of a period when other safe-haven assets are doing well and Bitcoin continues to fall. “Gold can’t reach all-time highs,” he said, when Bitcoin is down nearly 50%.
Performance of iShares Bitcoin Trust and SPDR Gold Shares Trust over the past year.
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