Former Swiss bank executive explores the prospects of Bitcoin ETFs following a day of unprecedented trade volume
Bitcoin ETFs have made a significant impact in the investment scene, as demonstrated by a record-breaking 14,261 bitcoin purchase on March 12. The growing interest in Bitcoin ETFs is evident with net spot inflows surpassing $1 billion, and Blackrock’s IBIT product attracting a record $849 million inflow and managing over 200,000 BTC in assets. This surge in trading activity has surpassed the initial excitement seen at the inception of ETFs and has set a new benchmark for market engagement.
Clive Thompson, a retired director of wealth management with extensive experience in Swiss private banking, shared his insights into the cryptocurrency market following the historic launch of Bitcoin ETFs on January 11, 2024. Thompson emphasized that the introduction of these ETFs, including the high-profile conversion of Grayscale’s Bitcoin Trust into an ETF, signifies a significant milestone in Bitcoin’s evolution as an asset class. He stated that Bitcoin has become an asset class that cannot be ignored, and the approval of 10 Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) acknowledges the undeniable demand for accessible exposure to Bitcoin’s price.
The ETF launch was historic, with over $700 million invested on its first day, the highest ever for an ETF. Despite initial challenges such as higher fees, Grayscale quickly improved its situation, leading to over $11 billion invested in Bitcoin through these ETFs since their launch. The growing acceptance of Bitcoin ETFs among investment firms worldwide is another notable development. Investment firms are under pressure to include Bitcoin ETFs as authorized investments, and Thompson explained the rigorous approval process within these firms. He believes that, gradually, these ETFs will be approved.
However, Thompson also highlighted the hurdles in the journey towards widespread adoption. Many asset allocators are likely to take a cautious approach, initially limiting exposure to a small percentage. Additionally, not all relationship managers are convinced about including Bitcoin in client portfolios immediately and may wait for a pullback before making a move.
Despite these challenges, Thompson remains optimistic about the future flow of funds into Bitcoin ETFs. Investment firms’ increasing acceptance and the allure of Bitcoin’s rising price, which has created a “fear of missing out” among investors, are expected to drive further investment. Since the ETF launch, Bitcoin’s price has surged from $47,000 to $72,800, further fueling interest.
Looking ahead, Thompson predicts continued growth but advises investors to be cautious about potential volatility driven by profit-taking and external risks. He believes in the resilience of Bitcoin, citing factors such as the network effect and concerns over fiat currency devaluation.
Thompson also highlighted the role of Genesis Holdings, which recently declared bankruptcy and liquidated GBTC shares. This liquidation indirectly influenced Bitcoin sales and marked a pivotal moment with potential implications for Bitcoin’s price trajectory. Thompson suggests that this could lead to a surge to new highs, attracting more inflows into Bitcoin ETFs.
In conclusion, Thompson sees a bright future for Bitcoin, with higher prices in the long term. He attributes this to the growing network of Bitcoin holders and its protection against currency devaluation, given the hard-wired limit of 21 million bitcoins.
