In the short term, Bitcoin is expected to experience a surge in ETF inflows from registered investment advisors (RIA). This scenario was considered by James Butterfill, Head of Research at CoinShares.
“Typically, platforms used by RIAs require three months of trading data before they can include an instrument. Thus, there may be an influx of investments from RIA clients as access to the product expands,” explained the expert.
According to Butterfill, as of now, only Carsen Group has permitted trading of spot Bitcoin ETFs.
“Considering that the RIA market assets are valued at ~$50 trillion, the potential inflow could be significant. For instance, if 10% of RIAs decide to invest 1% of their portfolios, this could lead to additional inflows of $50 billion,” calculated the specialist.
The analyst noted that the approval of spot Bitcoin ETFs has led to an average demand for coins of about 4500 BTC (on trading days). For comparison, miners produce only 921 BTC per day.
As a result, ETF issuers are forced to replenish their coin reserves through purchases on the secondary market, the specialist noted.
“We can see this in the data on over-the-counter platforms. The figure has fallen by 74% from its peak in 2020,” he pointed out.
On CEX, reserves have dropped by 29% from the ATH, Butterfill calculated.
“At the current daily rate [of supply growth] of ~4500 BTC, it would take 573 days to deplete reserves on exchanges. So there is still a long way to go,” the specialist emphasized.
The analyst predicted a gradual reduction in ETF inflows, which would allow the price of the leading cryptocurrency to “stabilize” on a plateau. In the future, expectations of a Federal Reserve Fed rate cut will provide support, Butterfill concluded.
Earlier, CoinShares calculated that inflows into cryptocurrency investment products from March 9 to 15 amounted to $2.92 billion, up from $2.69 billion in the previous reporting period.
According to SoSoValue, on March 18, the positive trend of net inflows into ETFs was interrupted on the 11th day. The outflow amounted to $145.45 million. Since approval, inflows have reached $12 billion. The AUM has decreased to $55.9 billion.
The reversal in dynamics is attributed to near-record outflows from GBTC by Grayscale.
Previously, Dan Tapiero, CEO of 10T Holdings, described Bitcoin’s rise to $200,000 as easily achievable. He cited ETF inflows and halving as drivers.