Bitcoin ETF

Bitcoin

Gold

<h2 id="key-points">Key Points</h2>
<ul>
 <li>The demand for Bitcoin investment products, particularly Bitcoin ETFs, is witnessing a slowdown post the fourth ‘halving’ event.</li>
 <li>Despite the slowdown, experts believe the demand for ETFs will bounce back after the halving.</li>
</ul>
<p>The interest in the latest Bitcoin investment products seems to be tapering off, following Bitcoin’s fourth “halving” event.</p>
<h2 id="bitcoin-etfs-and-the-halving">Bitcoin ETFs and the Halving</h2>
<p>Bitcoin exchange-traded funds (ETFs) became a key marker for institutional investments in <a href="https://crypto.ro/en/cryptocurrencies/bitcoin/" rel="noopener noreferrer nofollow">Bitcoin (BTC)</a> after their launch in January 2024. The 11 Bitcoin ETFs approved by US regulators in January collectively managed over $13 billion in inflows within a couple of months of their launch, a feat that took Gold ETFs years to achieve.</p>
<p>The Bitcoin halving, which happens approximately every four years and reduces the block reward for miners by half, is considered a significant event in the Bitcoin timeline. The recent halving has now cut the block reward from 6.25 BTC to 3.125 BTC. The reduced rewards and high demand for BTC via ETFs led many market pundits to predict a supply shock after the April 20 halving.</p>
<h2 id="etf-demand-slows-down">ETF Demand Slows Down</h2>
<p>However, after weeks of consecutive net positive inflows into Bitcoin ETFs, demand for these products appears to be slowing down. Many market analysts had predicted that GBTC outflows would soon dry up as institutions ran out of GBTC shares to sell, but inflows to ETFs have now turned negative. Ahead of the Bitcoin halving, Bitcoin ETFs recorded several consecutive days of net outflows ranging in the hundreds of millions of dollars.</p>
<p>Despite the current downturn, Jag Kooner, head of derivatives at Bitfinex, believes the demand for ETF will catch up after the halving. He attributes the reduction in inflows and significant outflows not to the halving event, but rather to the current SPX and Nasdaq decline and geopolitical tensions.</p>
<p>Kooner also noted that Bitcoin’s impressive rally since January 2024 was thanks not only to ETF approvals but also to market participants speculating on the impact of ETFs on Bitcoin’s price. He expects a stabilization of flows to result in a return of speculation on a bullish tipping of flows while we return to bullish trending market conditions.</p>
<h2 id="supply-shock-theory-takes-a-backseat">Supply Shock Theory Takes a Backseat</h2>
<p>The first three months of Bitcoin ETF inflows ranged from three to 10 times the daily mining supply of 900 BTC. The high ETF demand and heavy buying from institutional giants such as MicroStrategy led many market analysts to predict a post-halving supply shock.</p>
<p>However, by the third week of April, ETF demand has slowed to consecutive net daily outflows. The demand for ETFs stagnated at the end of March when Bitcoin saw its first week of net outflows.</p>
<p>Kooner added that people often ignore the long-term holders with a significant amount of supply. He said that there could also be a major distribution from long-term holders during the later stages of the current cycle.</p>
<p>While ETF demand has slowed, open interest in Bitcoin options has increased, implying that buy-and-hold investors are waiting on the sidelines while volatility-focused investors are taking their place.</p>
<p>Josef Tětek, Bitcoin ambassador at hardware wallet maker Trezor, stated that ETFs don’t necessarily signify institutional demand. Under U.S. regulation, ETFs are available to both institutions and retail investors. Thus, it’s impossible to speculate on the impact and relative influence of various demand drivers in the short term.</p>
<p>The post-halving supply shock notion was prevalent for most of February and March owing to heavy inflows into the spot ETFs despite GBTC outflows and new Bitcoin price highs. However, just days before the halving, the ETF flows turned passive, and the Bitcoin price also slid nearly 10% from all-time highs, prompting many to reconsider their supply shock theory in the short term.</p>
<p>Despite the current slowdown, some experts remain optimistic that Bitcoin ETF demand will reach new highs as market conditions improve after the halving.</p>

Declining Bitcoin ETF Demand Surrounding BTC Halving Event

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