Why Isn't Bitcoin's Price Going Up Despite Record Inflows Into Bitcoin Spot ETFs?

Jim Bianco, a financial analyst, in a series of posts on X, has expressed his concerns about Bitcoin's price remaining stagnant despite record inflows

Financial analyst Jim Bianco (NYSE:JPM) has expressed his concerns over Bitcoin’s price remaining stagnant despite record inflows into Bitcoin spot exchange-traded funds (ETFs).

According to Bianco, Bitcoin has seen inflows exceeding $12 billion since its all-time high in March. However, despite this, the price remains down 4%.

"Why isn't the price going up?" Bianco asked in a recent tweet.

He highlighted that several factors, such as the recent halving, increased institutional involvement, and growing interest in digital assets, should have pushed Bitcoin’s price to new highs.

"The halving (April 19), Trump endorsement (July), tech/SPX mania, Fed cut (Sept) and the price should have hit $100k months ago. Instead, it's down 4%."

However, Bianco noted that the answer is simple. Gold flows are $6 billion of mostly new money, while BTC’s $12 billion flows are mostly on-chain or centralized exchange money and not new.

Comparing the size of the trades, the average gold ETF trade is $72k, consistent with wealth manager allocation and institutions. Spot BTC ETF trades are only $16k.

"This seems to be money shifting from former Coinbase retail accounts to the ETF, and hence not new money," said Bianco.

He also expressed his concerns that the ETFs are not attracting new money and are not the gateway to getting boomers on-chain.

"Instead, they are sucking money back into Tradfi accounts. It comes from Coinbase, Kraken, hot wallets, and cold storage. No one cares about owning their own keys."

"So, the more glowing posts I see about massive inflows without new price highs, the more I worry that this is not good for crypto's future," Bianco added.

Meanwhile, Bloomberg analyst Eric Balchunas holds a differing view. He stated that even though the Bitcoin price growth is not as substantial as was anticipated by the investors, still the Bitcoin ETFs are positively impacting the asset.

"Even if you think Bitcoin ETFs are having a limited impact on price (I don’t), it’s still undeniable that ETFs are having a positive impact on the asset."

Balchunas also noted that Bitcoin has doubled in price since Blackrock’s ETF filing in early 2023 inspite of major market disruptions and several significant dumps.

"Bitcoin was $35k (and in the reputational doghouse thx to SBFraud) 16mo ago when BlackRock filed for ETF. Since then it’s up to $70k and running circles around every asset class despite limited catalysts and several significant ‘dumps’. Everyone can see…."

He also accredits some of Bitcoin’s resilience and current stability to the accessibility and low-cost structure of these ETFs, which have provided a regulated gateway for investors who were previously unsure of entering the crypto space.

Balchunas also dismissed the concept that Bitcoin’s price should be significantly higher by now.

"I’ve seen several posts saying, ‘despite massive inflows, Bitcoin’s price is still up only X%.’ This feels like complaining that a stock you own is only up 20% on the year during a bull market."

While ETFs are a powerful tool, this does not necessarily lead to rapid price surges, he noted.

"ETFs are like adding another layer of gasoline to the fire, but even gasoline takes time to burn. Especially when you douse the flames with water (i.e., crypto selloffs)."

However, experts believe that Bitcoin’s fundamentals remain strong. Recently, BlackRock CEO Larry Fink expressed his optimism about Bitcoin’s future.

"The long-term viability of Bitcoin is solid," Fink said.

As more investors pivot to Bitcoin as a hedge against inflation and fiat currency devaluation, this could lead to its sustainable price growth.

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