Bitcoin ETFs adoption needs time for wider acceptance

Bitcoin (CRYPTO:BTC) exchange-traded funds (ETFs), which launched in the United States earlier this year, are still finding their footing and haven't yet driven significant adoption, says Jim Bianco, CEO of Bianco Research. 

In a recent post, Bianco remarked that Bitcoin ETFs have not quite lived up to the high hopes surrounding their debut in January 2024. 

He pointed out that recent outflows, investors losing on their positions, and a lack of major institutional backing are signs that the Bitcoin ETF market is still maturing.

“There has been over $1 billion in net outflows from the 11 US Bitcoin ETFs in the last eight trading days,” Bianco observed, citing data from Farside Investors. 

He noted that the spot Bitcoin ETF market now sits at around $48 billion in assets under management, down from its peak of $61 billion in March.

According to Bianco, “very little new money has entered the crypto space,” and most ETF inflows were from existing holders moving back to traditional financial accounts.

Bianco suggested that Bitcoin ETFs might need the next Bitcoin halving in 2028 and more robust development of on-chain tools to truly take off. 

“Patience and another couple of seasons, including a winter or two, and development breakthroughs are needed first,” he said, hinting that the sector is still in a wait-and-see phase.

However, not everyone shares Bianco’s cautious outlook.

Eric Balchunas, a senior ETF analyst at Bloomberg, argued that Bitcoin ETFs have accumulated substantial assets under management, which is a sign of success. 

“If IBIT has like $20 billion in assets and that’s considered a failure, then what word should be used to describe an ETF with $7 million in assets?” Balchunas questioned.

While Bianco sees the Bitcoin ETF market as still finding its footing, others like Balchunas view the current asset levels as a strong indication of their growing potential.

At the time of writing, the Bitcoin (BTC) price was $54,727.70.