Jim Bianco of Bianco Research doubled down on his warning that spot Bitcoin BTC/USD ETF buyers might soon cause significant selling pressure for the market.
What Happened: Bianco pointed out that the average purchase price of spot Bitcoin ETF buyers is between $57,000 and $58,000, implying that around $37 billion in spot BTC assets (excluding GBTC) are currently sitting at break-even or a small loss.
Bianco emphasized that most of these ETF buyers are not institutional investors but rather hedge funds, smaller institutional investors holding less than $100 million, and, most notably, retail "degens." This concentration raises concerns about the stability of the market.
Bianco pointed out that the ETFs have acquired an astonishing 8.5% of the Bitcoin supply that moved in the last year, and they accomplished this feat in just four months. However, the price has only increased by 25% since the ETFs started trading on January 11. Bianco sees this as a potential red flag for the market.
Also Read: Spot Bitcoin ETFs Bled Another $162 Million On Tuesday
Why It Matters: Bianco compared the Bitcoin ETFs to other non-U.S. equity ETFs. He states that he couldn’t find any international stocks, gold, bonds, commodities or other alternatives with 8.5% of their underlying market’s effective supply, let alone acquire that supply in such a short timeframe.
Looking ahead, Bianco suggests monitoring how many of these ETF holders, particularly the retail "degens," will start selling their positions. While not all $37 billion in the ETFs are at risk of being sold, Bianco noted that when the ETFs were last at a loss in January, they sold 40% of their previous buying peak.
This selling pressure could have a significant impact on the Bitcoin market shortly.
What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image created using artificial intelligence with Midjourney.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
