Bitcoin ETFs are ‘a small tourism tool’, not a TradiFi adoption vehicle: CEO of Bianco Research

The approval of Bitcoin spot ETFs in January was one of the biggest moves in crypto this year, with funds generating a surge in demand for BTC. However, eight months after their launch, interest in these products appears to be waning.

In a recent post on X, Jim Bianco, CEO of Bianco Research, stated that Bitcoin ETFs have not lived up to their pre-launch hype. He noted that assets in the 11 local US Bitcoin ETFs have plummeted since peaking at $62 billion in June.

According to Bianco’s charts, the accumulated assets under management (AUM) of all Bitcoin ETFs are valued at $46 billion, which is the lowest in more than four months. With the increase in outflows, ETF holders currently have an unrealized loss of $2.2 billion.

Not a TradFi adoption vehicle yet?

Bianco stated that contrary to the popular belief that Bitcoin ETFs would drive the mainstream adoption of BTC by traditional financial investors (TradFi), the funds have received “very little new money”. Instead, most of the entries recorded were from “chain holders returning to TradFi accounts”.

He noted that investment giant BlackRock has confirmed the limited presence of financial advisors in the Bitcoin ETF space. In early June, BlackRock’s chief investment officer for index investing, Samara Cohen, said that about 80% of Bitcoin ETF purchases have been made by self-directed investors using online brokerage accounts.

“So far, these instruments haven’t lived up to the ‘here come the boomers’ hype.” Very few have come in, and those who have have losses and can now leave ($1 billion outflows over the last 8 days),” he noted.

Bitcoin ETFs need more time

Bianco further noted that Bitcoin ETFs still have the potential to drive TradFi adoption, but a few things are needed before the market booms.

He speculates that the upcoming halving of Bitcoin, which will occur in 2028, and significant development of on-chain tools through DeFi, NFT and more will likely drive the adoption of Bitcoin ETFs.

“First you have to have patience and a couple of seasons, including a winter or two, and progress in development,” Bianco concluded.

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