Inflows into Bitcoin ETFs Expected to Continue Long-Term

In the world of cryptocurrency investments, professionals predict continued inflows into Bitcoin ETFs, with financial advisors already allocating a portion of client portfolios to digital assets.

At a glance

  • The Chief Investment Officer of Bitwise predicts continued inflows into Bitcoin ETFs.
  • Financial advisors allocate 3% of client portfolios to Bitcoin ETFs
  • National account platforms approve investments in Bitcoin ETFs
  • Bitcoin ETF demand is expected to increase among professional investors
  • Kerrisdale Capital questions MicroStrategy’s valuation compared to Bitcoin

The details

In the world of cryptocurrency investments, the Chief Investment Officer (CIO) of Bitwise, Matt Hougan, believes that inflows into spot Bitcoin Exchange-Traded Funds (ETFs) will continue for years to come.

Financial advisors have already allocated 3% of client portfolios to Bitcoin ETFs, while others have yet to consider them.

National account platforms are now approving investments in Bitcoin ETFs, indicating a growing acceptance of digital assets in mainstream finance.

Hougan notes that the current demand for Bitcoin ETFs is part of a long-term trend, with professional investors expected to shift their stance in the coming years.

The ramp-up of inflows into Bitcoin ETFs is predicted to be faster than that seen with gold ETFs, with 3% now considered the new standard allocation for Bitcoin investments.

ETFs are seen as a way to de-risk the downside of Bitcoin investments, providing more stability to the market.

CEO Benjamin Cowen of Into The Cryptoverse questions the ongoing Bitcoin market cycle, wondering if it is following a normal trajectory or a “left-translated” one.

As Bitcoin reaches new all-time highs just weeks before the halving, Cowen speculates that the cycle peak could arrive sooner than in previous cycles.

The impact of Federal Reserve rate cuts on Bitcoin markets may lead to a potential market correction, influencing whether the cycle aligns with past trends.

Kerrisdale Capital has drawn attention to the valuation of MicroStrategy’s shares in comparison to Bitcoin, suggesting that the shares are currently overvalued.

This analysis led to a 14% decline in MicroStrategy’s shares, as the premium at which they are trading exceeds two and a half times the spot price of Bitcoin.

Kerrisdale Capital anticipates a decrease in this inflated premium over time, emphasizing that much of MicroStrategy’s value is tied to its Bitcoin holdings rather than its software analytics division.

Despite the company’s significant increase in Bitcoin holdings, the amount of Bitcoin per share has remained relatively stable.

MicroStrategy’s CEO, Michael Saylor, remains confident in the company’s appeal to investors, announcing a rebranding as a “Bitcoin development company” to align with its strategic focus on Bitcoin investments and software development.

With a current holding of 214,246 BTC, representing a 54% increase from the previous year, Saylor aims to accumulate Bitcoin for shareholders further and contribute to the growth of the Bitcoin network through innovative strategies.

The evolving landscape of cryptocurrency investments, market cycles, and the valuation of companies like MicroStrategy against Bitcoin reflects the dynamic nature of the digital asset ecosystem, shaping the future of finance and investment strategies.

Article X-ray

Facts attribution

This section links each of the article’s facts back to its original source.

If you suspect false information in the article, you can use this section to investigate where it came from.
– Matt Hougan, CIO of Bitwise, believes inflows into spot Bitcoin ETFs will continue for years
– Hougan met financial advisors who have allocated 3% of client portfolios to Bitcoin ETFs
– Some financial advisors have not considered Bitcoin ETFs at all
– National account platforms are approving Bitcoin ETF investments
– Inflows into Bitcoin ETFs are part of long-term sustained demand
– Professional investors currently unable to buy Bitcoin ETFs will change in the next couple of years
– Ramp-up of inflows into Bitcoin ETFs will be shorter than gold ETFs
– 3% is the new 1% in Bitcoin investment allocation
– Launch of ETFs has de-risked the downside of Bitcoin
– Demand for Bitcoin ETFs from U.K. investors is behind the surge in the U.S.
– Into The Cryptoverse CEO Benjamin Cowen postulated whether the current Bitcoin market cycle is normal or a “left-translated” one
– Bitcoin has reached a new all-time high with three weeks until the halving
– The possibility of the cycle peak coming earlier than previous ones is introduced
– Bitcoin markets may pull back after Federal Reserve rate cuts, potentially putting it back on track with prior cycles
– The reaction to rate cuts will determine if the market cycle is normal or left-translated
– The Federal Reserve kept rates the same at 5.5% during its last meeting on March 20
– 95.8% of observers think the rates will remain unchanged in the next meeting in May
– Cowen compared the price action in 2013 and 2021 to suggest a left-translated cycle
– The current cycle’s returns may resemble post-halving years if the peak is translated one year ahead
– The bull market cycle will depend on Bitcoin’s reaction after rate cuts later this year
– Glassnode made comparisons to previous market cycles, noting similarities in duration and distance from the April 2021 peak to December 2020 in the 2018-21 cycle
– Kerrisdale Capital argues that MicroStrategy’s shares are overvalued compared to Bitcoin
– MicroStrategy’s shares saw a 14% decline following this argument
– The premium at which MicroStrategy’s shares are trading is over two and a half times the spot price of Bitcoin
– Kerrisdale Capital believes the inflated premium on MicroStrategy’s shares will likely decrease
– MicroStrategy’s software analytics division contributes just 3% to the company’s overall value
– Much of MicroStrategy’s Bitcoin acquisitions are financed through debt and equity offerings
– Despite an increase in Bitcoin holdings, the amount of BTC per share has remained largely unchanged
– Some argue for MicroStrategy’s premium due to its ability to reinvest software business cash flows, lack of management fees, liquidity, and ease of trading
– MicroStrategy trades at a 2.6x equity premium to Bitcoin, surpassing the historical average of 1.3x
– The expanding accessibility of cryptocurrencies has reduced the appeal of MicroStrategy as a primary route for Bitcoin investment
– MicroStrategy’s CEO, Saylor, expressed confidence in the company’s appeal to investors
– Saylor announced MicroStrategy’s rebranding as a “Bitcoin development company”
– MicroStrategy currently holds 214,246 BTC, a 54% increase from the previous year
– Saylor aims to accumulate more BTC for shareholders and promote the growth of the Bitcoin network through software development and leveraging capital markets.

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