Who Buys Bitcoin ETFs? analyst discussion

The record-breaking volume and flows of Bitcoin spot ETFs have clearly demonstrated that there is tremendous demand for the long-awaited and recently approved investment vehicle. But of whom do you ask?

Different analysts have different views, but James Butterfill, head of research at CoinShares, doesn’t think this is a retail market.

“Only now we are seeing the Registered Investment Advisor (RIA) market open up with the Carsen Group approving ETF approval,” Butterfill said. decryption. “This suggests that ETF flows in the U.S. are primarily institutional.”

On the other hand, Bitwise CIO Matt Hougan said he believes there is a mix of different investor types, including a relatively large retail sector.

“You’re seeing retail investors participating in these ETFs, you’re seeing hedge funds, you’re seeing RIAs and independent financial advisors,” Hougan said. Squawk Box on CNBC On Thursday.

The executive explained that most new ETFs, including Bitcoin ETFs launched by Bitwise, BlackRock and others, do not immediately become “active” with major broker-dealers, brokerages or other institutions upon launch.

If so, most of the new demand for the fast-growing fund is likely to come from retail, independent investment advisers and hedge funds for now.

“I think there will be a bigger wave coming in the coming months as the major wirehouses start to come on. But this was Bitcoin’s IPO moment,” he continued.

“Wirehouse” is a term used to refer to large companies and platforms such as Morgan Stanley, Merrill Lynch, UBS, and Bank of America.

Although many have welcomed Bitcoin ETFs, some major US firms, such as Merrill Lynch, are still blocking their clients from accessing their investment products. Vanguard, the world’s second-largest asset manager, also blocks access to Bitcoin ETFs through its platform due to the company’s “philosophy” regarding investing.

Bitcoin ETFs saw net outflows on Wednesday as daily trading volume soared to more than $7.7 billion. Break new highs With over $673 million and the price of Bitcoin reaching an all-time high, these wirehouses may soon need to add to their ETFs.

“I’m sure the pressure is building on them.” tweeted Bloomberg ETF analyst Eric Balchunas noted on Thursday that recent ETF flows are likely “natural demand” for BTC rather than algorithmic buying.

“They like to see (a) performance and be rewarded, but with grassroots demands like this, they are going to have to act quickly,” he continued.

On Wednesday, Balcunas pointed out that the Bitcoin ETF recorded more individual transactions than SPY (SPDR S&P 500 ETF Trust, the world’s largest ETF that tracks the S&P 500 index). This suggests there is a larger “retail component” to the investment base. More than he expected.

However, Butterfill said it is difficult to estimate the total number of transactions that occurred. “They may be separated to help with deployment,” he said.

Macro investment analyst Jim Bianco likened Bitcoin’s recent pump to the retail-based GameStop craze of 2021, based on the average Bitcoin ETF trade size of about $13,000.

But Balchunas said this analysis is a bit overblown.

“It’s not on the big advisory platforms yet. Also, some of the deals were significant,” he replied. “This is not a GameStop retail store. This is ETF Retail. gap.”

editor Ryan Ozawa.