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- Jim Bianco believes the majority of the first quarter’s spot Bitcoin ETF volume was dominated by retail traders rather than institutional investors.
- The use of 12-word keyphrases for web3 wallets has been the leading stumbling block to the mass adoption of on-chain digital assets.
Macro investment researcher, Jim Bianco, believes around 85 percent of the United States-based spot Bitcoin exchange-traded funds (ETFs) are currently dominated by retail traders. The veteran market researcher indicated that first quarter 13F filings to the US SEC show that only 3 percent of the outstanding spot Bitcoin ETFs’ market cap was held by investment advisors, while the remaining portion is held by hedge funds.
“I feared the spot BTC ETFs were effectively Orange FOMO poker chips. The Q1 13F filings only further convinced me this was the case,” Bianco noted.
Retail Traders Speculate on Bitcoin Via Traditional Finance
According to Bianco, the boomers have not yet adopted the digital asset narrative despite Congress rallying to implement clear crypto regulations by the end of this month. The macro market researcher further highlighted that the average spot Bitcoin ETF trade is around $15.3k, which is far below the average size of traditional spot ETFs, over $200k.
Consequently, Bianco is convinced that the same investment strategy used in meme coins is being deployed in the spot BTC ETFs. Furthermore, a study on the spot BTC ETF flows shows cash inflows have only happened amid price increments and vice versa.
“The average purchase price they hold BTC at is around $58k to $59k. When the price of Bitcoin went to this level on May 1, these ETFs had record outflows. Now that the price is well above this average price, outflows stopped. This is Degen behavior,” Bianco noted.
According to the latest spot Bitcoin ETFs data, BlackRock’s IBIT recorded an impressive cash inflow of about $290 million on Wednesday. Consequently, all US-based spot Bitcoin ETFs registered a total cash inflow of about $305 million.
Why So
According to Bianco, the main reason that retail traders are adopting spot Bitcoin ETFs in the United States is not due to regulatory clarity but mainly due to storage simplicity. Moreover, market pundits believe retail investors find it challenging to keep track of 12 words on a piece of paper.
Added later.
Assuming @EricBalchunas wrote this …
He is correct that on-chain is not realistic, as stated.
But if the goal is to create a new decentralized financial system, driving everyone back into Tradfi and giving them an "orange chip" will rekt the digital world. pic.twitter.com/NtK8JVp1NT
— Jim Bianco (@biancoresearch) May 19, 2024
Bianco noted that more retail traders have been opting to trade Bitcoin via trade tools, which is gradually killing the web3 industry. As a result, Bianco highlighted that a new decentralized financial system is needed to enhance the new financial system.
Market Picture
As Crypto News Flash previously pointed out, Bitcoin price has significantly benefited from the ongoing adoption of spot BTC ETFs in the United States and Hong Kong. Furthermore, Bitcoin price rallied above the prior cycle’s top for the first time even before the halving event, thus indicating heightened demand.
According to the latest market data, Bitcoin price rallied over 5 percent in the last five days to trade at around $70k at the time of this writing. Meanwhile, Bitcoin continues to bleed to the altcoin market as shown by the notable reversal in the ETH/BTC pair and BTC dominance. No coins selected
