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The ETF had significantly higher flows and assets than most predicted prior to launch, which Its unparalleled success has analysts speculating just how high it could rise.
With Grayscale’s flagship Bitcoin Trust converting with assets, the 11 spot Bitcoin ETFs, which started with $28.9 billion in assets at launch, now have a combined AUM of $61 billion. Due to massive inflows and rising Bitcoin prices, it is heading towards the size of a gold ETF with a total AUM of approximately $97 billion.
“They will pass a gold ETF at some point. That would be a big deal,” Bloomberg senior ETF analyst Eric Balchunas told The Block. “I think the only thing that could derail this whole thing is some kind of black swan.”
Balchunas said the ETF could be described as The Big Mo, referring to a situation where something catches fire and momentum propels it forward, such as a presidential campaign.
“The mojo of these ETFs is off the charts right now. As long as the price of Bitcoin continues to rise and rise 3-4 out of 5 days a week, I don’t see this trading slowing down for some time. Because right now, it’s on the rise, it’s kind of on the rise. It is what it is,” Balchunas said. “As the price goes up, more people get FOMO and become interested, and the more flow comes in, the higher the price goes.”
Balchunas said it will eventually peak, but noted that the numbers are getting stronger by the day. He pointed out that VanEck’s Bitcoin ETF received $180 million in inflows when it temporarily cut fees to zero, a sign that interest in these ETFs is still very high.
“I mean, those guys are really hot. This is the phrase I like to use. It won’t last forever. But the question is when will we reach a plateau?” he said
Balchunas speculated that it would take a significant market decline to bring them back to Earth.
“I think a severe decline in the stock market is probably the only thing that could derail all this mojo right now. I’m not saying this will necessarily cause Bitcoin to fall, but it will certainly put this story on the back burner of people’s minds. “For most people, stocks are a big part of their portfolio, so they might be more interested in them,” he said.
“So as long as the markets, stocks and bonds remain flat or in an upward trend, I don’t see any sustained growth pattern for them,” Balchunas added.
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