By
Bena Ilyas
May 16th, 2024
In addition to the rise of Bitcoin ETFs, the broader cryptocurrency market has seen record inflows, with a CoinShares report indicating that crypto saw inflows of $2.7 billion last week.
Eric Balchunas, a senior ETF analyst at Bloomberg, has predicted major developments in Bitcoin exchange-traded funds (ETFs), foreseeing two crucial factors that could transform how these ETFs are accessed and traded by the end of 2024.
These developments aim to expand the range of investors who can participate in Bitcoin ETFs and potentially introduce options trading based on these ETFs.
On Tuesday, Bitcoin’s price surged above $73,000, a historic high, driven by significant news on US inflation data as reported by Coinspeaker.
Will Bitcoin's low float increase volatility? @biancoresearch @EricBalchunas
Clip taken from today's episode out now
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— On The Margin (@OnTheMarginPod) March 13, 2024
Wirehouse Platforms to Drive Accessibility of Bitcoin ETFs
As per Balchunas, one major catalyst in this evolution involves making Bitcoin ETFs available on large wirehouse platforms, which currently oversee between $7 trillion and $10 trillion in assets but do not offer Bitcoin ETFs yet.
Balchunas anticipates this situation changing within the next few months, likening it to putting a product on the shelves of a major retailer, which would significantly increase exposure and availability.
Balchunas also pointed out that besides wirehouses, there is potential for other significant investment platforms like Raymond James and LPL to enhance accessibility to Bitcoin ETFs. He also indicated that numerous smaller platforms may follow suit, further expanding the reach of these investment vehicles.
Options Trading for BTC ETFs by September 2024
Balchunas also anticipates a second key development: the implementation of options trading for Bitcoin ETFs. He suggested that options trading could become accessible as soon as September. This, combined with the wider availability of Bitcoin ETFs on major platforms, is projected to stimulate substantial growth and interest in these investment vehicles.
Balchunas emphasized the importance of these developments, describing them as “massive catalysts” that are yet to fully materialize. He also hinted at the potential impact of the upcoming Bitcoin halving event, which could further boost interest and investment in Bitcoin and its associated ETFs.
Balchunas foresee banks developing structured products linked to Bitcoin ETFs, drawing parallels to Ark Invest’s approach. He also discussed the potential for 2X spot Bitcoin ETFs, which include swaps within the ETFs, along with the rise of covered call strategies and ETFs combining long Bitcoin and short gold positions.
Total Flows into Bitcoin ETFs Outpace Gold ETFs Over Five Years
Bitcoin ETFs are gaining momentum while gold ETFs are seeing a decline. Nate Geraci, co-founder of an ETF institute, reported that gold ETFs currently hold almost $100 billion in assets.
In contrast, the total inflows into nine new spot Bitcoin ETFs over the last two months have surpassed the total inflows into all physical gold ETFs over the past five years.
This trend is further evidenced by cumulative flows, which peaked at about $67 billion in October 2020 but have since decreased to $36 billion over three years, according to macro analyst Jim Bianco.
The orange line is the spot gold price.
The blue line is the cumulative flow on gold ETFs.Gold flows peaked in October 2020 … 3.5 years ago.
So, funds with inflows are beating funds with outflows???? pic.twitter.com/CpmQUg4sXh
— Jim Bianco (@biancoresearch) March 7, 2024
This trend highlights the increasing attractiveness of Bitcoin as a digital store of value. In an interview with CNBC, MicroStrategy co-founder Michael Saylor expressed his belief that Bitcoin will outshine gold, stating that Bitcoin is poised to “eat gold” due to its superior characteristics compared to the traditional precious metal.
In addition to the rise of Bitcoin ETFs, the broader cryptocurrency market has seen record inflows, with a CoinShares report indicating that crypto saw inflows of $2.7 billion last week.
This surge in inflows brought total assets in crypto investment vehicles to a record high of $94.4 billion, representing a 14% increase from the previous week and an 88% increase since the beginning of the year. Over $2.6 billion of these inflows went into Bitcoin, indicating strong investor interest in the leading cryptocurrency.