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Bitcoin Investors Start to Consider What Happens After the ETF Craze Cools Down
(Bloomberg) — As the second quarter draws to a close, cryptocurrency investors are wondering what the future holds for bitcoin after it fell from all-time highs seen at the height of the ETF craze.
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The original cryptocurrency is down about 13% since March, a stark contrast to the 67% and 57% spikes it saw in the previous two quarters, respectively. Bitcoin, which hit a record high of $73,798 on March 14, is closing the quarter at about $61,000.
The crisis has raised the question of whether the cracks in momentum trades like Bitcoin are a sign of a tougher outlook for risk appetite, as the prospect of higher interest rates for an extended period looms over financial markets.
“A lot of people in the market have questions that are mostly anchored in concerns from a macro perspective,” Austin Reid, global head of revenue and business at FalconX. “So I think there’s just a little bit of near-term uncertainty that’s playing out in the crypto market, as we’re seeing in other asset classes as well.”
One of the best indicators of the decline in interest may be the slowdown in demand for U.S. ETFs authorized to hold bitcoin, approved by the Securities and Exchange Commission in January.
According to data collected by CoinShares, investors invested about $2.6 billion in Bitcoin funds in the second quarter, up from about $13 billion in the first three months of the year.
“There was a lot of euphoria around the launch of ETFs, and then there was a natural correction in prices after the rally,” said Matthew O’Neill, co-head of research at Financial Technology Partners.
ETFs have received a surge of interest from professional investors who want exposure to Bitcoin but want to buy the cryptocurrency only through institutional channels, O’Neill said.
For investors who have not yet invested in ETFs, he said they may want to wait to do so during the next Bitcoin price rally.
–With the assistance of Muyao Shen.
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