This year, the United States approved spot funds for Bitcoin, attracting significant investor attention and resulting in an influx exceeding $13 billion. Despite outperforming gold ETFs, demand for spot Bitcoin ETFs has slowed down, potentially due to factors such as the recent Bitcoin halving, geopolitical tensions, and risk balancing by investors. Experts predict a temporary decline in demand, with expectations of a recovery after the halving. Additionally, some industry analysts anticipate a supply shock for centralized exchanges in the coming year, with Bitcoin reserves potentially depleting in the next nine months.
Spot Bitcoin ETFs Gain Momentum, Despite Recent Slowdown
The United States' approval of spot funds for Bitcoin, the flagship cryptocurrency, has garnered significant attention from institutional investors. Within months of their launch, these funds have amassed over $13 billion in inflows, surpassing the performance of gold exchange-traded funds (ETFs).
At their peak, spot Bitcoin ETFs attracted approximately $1 billion daily from investors. However, industry experts have observed a gradual slowdown in demand. One potential factor contributing to this may be the recent halving event on the Bitcoin network, where the mining reward was reduced by half.
Despite the recent slowdown, industry insiders like Kuner, a representative of the trading platform, believe it to be a transient phenomenon. They anticipate a swift recovery in demand for Bitcoin ETFs post-halving.
Factors influencing the temporary decline in interest include risk balancing by investors, who have been riding a bullish wave in Bitcoin since the start of the year. Additionally, speculators have likely capitalized on the halving event to secure profits.
Geopolitical tensions in the Middle East have also played a role, leading investors to seek safety in conservative assets such as gold, the US dollar, and government bonds.
Looking ahead, industry analysts predict a potential supply shock for centralized exchanges in the coming year. Bybit, a prominent exchange, has estimated that the Bitcoin reserves of several major exchanges could be depleted within the next nine months.
The continued growth and adoption of Bitcoin ETFs, coupled with the potential supply shock faced by exchanges, indicate a bullish outlook for the cryptocurrency market in the long term. Investors are advised to carefully monitor market conditions and assess their risk appetite accordingly.
