The price of bitcoin traded above $50,000 on this week for the first time since 2021, demonstrating the stark change in appetite for the token since mainstream bitcoin investment funds launched earlier this year.
Bitcoin has gained almost 15 per cent since the start of the year, largely driven by the US Securities and Exchange Commission rowing back on a decade-old policy to approve several spot bitcoin exchange traded funds, vehicles offering investors exposure to the price of bitcoin through a regulated product.
Many of Wall Street’s most familair names have offered spot bitcoin ETFs, including BlackRock, the world’s largest asset manager. But despite widespread anticipation over their launch the price of bitcoin initially fell roughly 15 per cent in an underwhelming performance on the days following the SEC’s approval and the trading of the ETF’s.
The token’s recent surge to $50,000 — more than double the level at which it stood a year ago — is perhaps evidence that the ETFs are bringing new money into the market and represents an opportunity for bitcoin to turn a corner for the long run according to some analysts.
“Following a disappointing launch of several bitcoin ETFs we’re now seeing continued inflows into newly issued funds, and I think we’re seeing much more organic demand for bitcoin as a result,” said James Butterfill, head of research at crypto investment group CoinShares.
After the initial waves of inflows into new spot bitcoin ETFs and outflows from Grayscale Investments’ converted product, asset managers are turning their attention to the long-term investment case for bitcoin ETFs.
According to data shared by CoinShares, the newly approved bitcoin ETFs have attracted roughly $3bn in net flows, even after more than $6bn was pulled out of Grayscale’s product since its first day of trading as an ETF.
However, the move in Bitcoin may not be entirely be due to ETF’s with other factors impacting the crypto market and indeed the volatility of the market is what makes it attractive to both speculative inflows and movements.
As crypto begins to impact the world of traditional finance, some are optimistic that mainstream investors will eventually begin allocate a small percentage of their portfolios to products such as bitcoin ETFs alongside traditional investments such as government bonds and shares.
(Source: FT)
