Here’s Why Investors Shouldn’t Get Emotional Over Spot Bitcoin ETF Inflows and Outflows: Analyst

Spot Bitcoin ETFs have become a key part of the entire cryptocurrency ecosystem in just four months after they went live on US financial markets.

However, Bloomberg’s ETF specialist – Eric Balchunas – explained that people should not get too carried away when they see notable changes in the short-term flows.

May Covers April Losses

These products were finally greenlighted by the US SEC in mid-January and caused mayhem when they launched, leading to enhanced volatility but also a new all-time high for BTC’s price in just two months. This transpired when the ETFs, aside from Grayscale’s GBTC, were attracting impressive inflows.

However, the trend started to change on a few occasions in March, but especially in late April and early May. In fact, there’s a negative seven-day streak from April 24 to May 2 when the outflows skyrocketed to over $1.2 billion.

Expectedly, bitcoin’s price suffered during this period, dropping to a multi-month low of under $57,000. Yet, those dark days also passed, and the ETFs started attracting huge inflows in the past week or so.

Moreover, Eric Balchunas asserted that the May inflows of $1.3 billion had covered all the losses seen in April, which is perhaps why BTC’s price has shot up by around ten grand and currently sits at $67,000.

The bitcoin ETFs have put together a solid two weeks with $1.3b in inflows, which offsets the entirety of the negative flows in April- putting them back around high water mark of +$12.3b net since launch. This key number IMO bc it nets out inflows and outflows (which are normal) pic.twitter.com/tdnZOKEocM

— Eric Balchunas (@EricBalchunas) May 17, 2024

Don’t Get Too Emotional

Even though the most recent filings to the US SEC revealed numerous large entities entering the Bitcoin ETF landscape, such as Morgan Stanley, the State of Wisconsin Investment Board (SWIB), and Bracebridge Capital, these products also attract a certain cohort of retail investors, which are more inclined to making emotional decisions on when to buy and sell assets.

As such, Balchunas warned people to leave emotions at the door as these inflows and outflows are just a “part of ETF life.” He believes they will become net positive in the long term, which seems to be the case now with over $12 billion already poured in.

Last two mos show why best not to get emotional over flows which come in and out, part of ETF life, but a) i think they’ll net out positive long-term b) the flow amts on either side are small relative to aum maybe (1-2%) so it’s never SO OVER or SO BACK if you think about it

— Eric Balchunas (@EricBalchunas) May 17, 2024