Proponents heralded the first Bitcoin exchange-traded funds as a sign that the largest cryptocurrency could soon be a portfolio mainstay. So far, investors don’t seem to be buying the hype.
That’s the message of a Deutsche Bank Research survey conducted a few days after the first Bitcoin ETFs started trading. A third of respondents said they expected Bitcoin prices to fall below $20,000 before the end of 2024, from above $40,000 at the time the survey was taken, according to a Deutsche Bank research note published Tuesday. Another 10% or so think the price will fall somewhere between $20,000 and $40,000, while around a quarter think it land above $40,000.
About 42% of respondents said they thought Bitcoin would completely disappear in the next few years, versus 39% who said they thought it would still be around. More than half the survey takers said they thought a major cryptocurrency, though not necessarily Bitcoin, would disappear or collapse by 2026.
The Deutsche Bank researchers attributed some of these bearish views to fallout from the bankruptcy of FTX and other companies in 2022. Some of the remaining trading platforms, including
Coinbase
and Binance, are also fighting regulators‘ allegations of operating an unregistered securities exchange.
Such skepticism could at least partly explain why the launch of the ETFs isn’t yet living up to lofty expectations. While trading volume in the funds—which have been launched by
BlackRock,
Fidelity Investments, Bitwise, Invesco, and others—has been robust, inflows into the funds have started to wane.
According to Bloomberg, the 10 Bitcoin funds on Monday actually saw a net outflow of about $88 million, bringing their seven-day total net inflows to about $1.1 billion. Even though the new funds have continued to collect money, they have been offset by outflows from the $22.2 billion
Grayscale Bitcoin Trust.
The trust has existed for years, but traded like a closed-end fund before converting into an ETF this month. That fund has seen $3.4 billion in outflows since converting.
Bitcoin itself has also suffered. The largest crypto’s price is about $39,000, 17% below its high this month. Shares of Coinbase Global, the largest U.S. trading platform, have fallen 29% in the past month to $122.44.
J.P. Morgan
downgraded Coinbase shares on Tuesday, citing Bitcoin ETF disappointment.
Bitcoin proponents think they have reasons for optimism despite the recent downturn. In April, Bitcoin is expected to undergo its “halving,” when the rewards garnered by miners for maintaining the network get cut in half. In the past, such events, which occur roughly every four years, have been accompanied by Bitcoin bull markets.
Another reason not to worry too much about the ETFs’ performance so far is that some financial advisors that fund issuers see as the true market for their funds haven’t been able to buy yet. Many advisory platforms require ETFs to trade for a certain period of time and undergo compliance reviews before opening them up for trading.
Still, the Deutsche Bank survey shows that crypto has an uphill battle to convince investors that it should be treated as a legitimate asset class.
Write to Joe Light at [email protected]
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