Bitcoin Could Experience Positive Demand Shock Due to RIA: Analyst
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One analyst said the country could experience a positive demand shock in the coming months as new money flows in from registered investment advisers.
A positive demand shock refers to a sudden surge in demand for an asset such as Bitcoin, potentially triggered by significant capital inflows into a particular market.
James Butterfill, head of research at CoinShares, highlighted the dynamics that could trigger such an event, noting that spot Bitcoin exchange-traded funds have not yet been made available to the RIA market. “Typically, the fund platforms used by RIAs require three months of prior transaction data. This may also include newly issued ETFs. So, once the RIA market becomes accessible, investments can flow in,” he said.
He emphasized that currently only investment advisory firm Carsen Group allows Bitcoin spot ETF trading. “Given that the RIA market has approximately $50 trillion in assets, the potential inflow could be significant. For example, if 10% of RIAs chose to invest 1% of their portfolio, an additional approximately $50 billion could be added. “There may be an influx.” Added.
In a recent blog post, Butterfill commented on the increasing demand and decreasing supply currently unfolding in the Bitcoin market. “The launch of several spot Bitcoin ETFs on January 11 increased average daily demand to 4,500 Bitcoin (per trading day), but only 921 new Bitcoins were minted per day on average,” he said.
He added that the supply of newly minted Bitcoin cannot keep up with demand and that ETF issuers will have to source Bitcoin primarily from secondary markets. “We can see this in our data where OTC desk coin holdings have declined 74% since their peak in 2020, likely driven by ETF demand in recent years,” he said.
Spot Bitcoin ETF inflows hit record high.
Net inflows into U.S. spot Bitcoin ETFs hit record levels last week. Net inflows across 10 spot Bitcoin ETFs reached $2.57 billion last week, according to data from BitMEX Research and Farside Investors. This is a 15% increase over the $2.24 billion inflows received the previous week.
BlackRock’s IBIT continued its dominance, generating $2.48 billion in inflows. Fidelity’s FBTC came in second with $717.9 million, and VanEck’s HODL came in third with $247.8 million. However, Grayscale’s converted GBTC fund recorded outflows of $1.25 billion, while Invesco’s BTCO also recorded outflows of $29.4 million.
Total net inflows since spot Bitcoin ETF trading began on January 11th are now just over $12 billion.
According to The Block’s pricing page, the largest digital asset by market capitalization is up 1.92% over the past 24 hours and is currently trading at $68,200 as of 8:28 a.m. ET. The GM 30 index, which represents the top 30 cryptocurrencies, rose 2.45% to 152.93 over the past 24 hours.
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