Analysts Discuss Sluggish Spot Bitcoin ETF Performance Amid Market Fluctuations

After a new high on March 14, Bitcoin’s price fell 18% and now moves sideways, with some taking profits.
Willy Woo suggests self-custody investors are buying the dip, showing acumen, unlike “noob” ETF investors.
Eric Balchunas counters, highlighting strong inflows into new Bitcoin ETFs, suggesting resilience among these investors.

After hitting new all-time highs on 14 March, the price of Bitcoin dropped by as much as 18% in the days after and has since gone sideways.

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At the time of writing one BTC changes hands for US$66,705 (AU$102,371), just 0.32% down from last week. Amidst all this someone took profits—and it’s not “noob” ETF investors as some suggest.

Spot Bitcoin ETF net-flows slowing down, source CryptoQuant

Are “Noob” Investors the Weak Hands?

Analyst Willy Woo said on X that US$1.6bn (AU$2.5bn) of ETF outflows contrasted by Bitcoin network inflows of US$1.1bn (AU$1.7bn) suggest self-custody investors bought the dip.

He argues the action of buying the dip is a savvy investor move, implying that self-custody Bitcoin holders are demonstrating stronger conviction and investment acumen by buying low—while ETF investors are reacting emotionally, indicative of weak hands.

ETF investors showing they’re noob. On the first dip ETFs did $1.6b of outflows while the Bitcoin network received $1.1b of total net flows. This means plenty of self-custody investors bought the dip.

Willy Woo

However, Bloomberg senior ETF analyst Eric Balchunas explains that new ETF investors, dubbed ‘Boomer’ investors, are actually the strong ones. This is based on the observation that new Bitcoin ETFs saw about US$1.2 billion (AU$1.8bn) in inflows over the past five days despite an 8% price decline.

Balchunas elaborates that outflows from GBTC (Grayscale Bitcoin Trust, a pre-ETF product) are not indicative of weak investor sentiment but are transactions by Genesis trading GBTC shares for spot Bitcoin, thus a net neutral event. The Bloomberg analyst concludes that, overall, ETFs have been net buyers of Bitcoin, suggesting strength among this investor cohort.

Nope. In fact, the exact opposite is true, the new ‘Boomer’ ETF investors are the strong ones (as we predicted), it’s other bitcoin owners behind the selling pressure. I’ll explain: the nine new Bitcoin ETFs have taken in about $1.2b in past 5 days as price declined 8%. $GBTC had… https://t.co/X6UXyBrGy8

— Eric Balchunas (@EricBalchunas) March 22, 2024

Both Woo and Balchunas make compelling arguments and the “rightness” of each argument may depend on the specific lens through which you view the situation.

Top ETFs Continue Strong Performance

Overall, the Spot Bitcoin ETFs have seen several days with net outflows, but again it depends how you look at things. Exclude Grayscale—which Balchunas says is having massive outflows due to high fees, profit taking etc.—and the nine are actually seeing continued inflows.

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Balchunas says BlackRock’s IBIT now represents more than 50% of the asset manager’s year-to-date (YTD) net inflows, attracting twice as much as any of its other 420 ETF offerings. Similarly, FBTC is having a significant influence at Fidelity, accounting for 70% of its YTD inflows and being five times larger than any of its other ETFs.

BlackRock YTD flows of 420 ETFs, source: Eric Balchunas via Bloomberg/ X