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ETF Expert Says This Is Why Zero Inflows Into Bitcoin ETFs Is Not a Major Concern

An ETF analyst explains why the slowdown in Bitcoin ETF inflows is not a major concern.

bitcoin partially covered in dirt

Investors have raised concerns over the recent sluggish performance of the spot Bitcoin exchange-traded funds (ETFs). At the close of Monday’s business hours, only BlackRock’s IBIT saw an inflow of $73.4 million while others saw an outflow or no flows. The discouraging metrics coincide with BTC’s recent bearish trends.

Calming investors’ worries, the Bloomberg ETF analyst James Seyffart shared a tweet thread comparing Bitcoin ETFs’ performance with other ETF products available in the U.S. financial market.

Bitcoin ETFs: What Goes On Behind the Scenes?

Explaining that Bitcoin ETFs are not alone, the analyst stated that out of about 3500 ETF products available in the country, 2903 recorded zero inflow yesterday.

Seyffart further shared insights on what goes on behind the scenes regarding ETFs. ETF products are made up of shares. That is, an ETF is broken down into units of shares. When new shares are created or destroyed, onlookers notice an inflow or outflow in the underlying investment vehicle.

On the other hand, when the number of shares bought (supply) and sold (demand) are relatively equal, there is no need for the creation of new shares or the destruction of existing shares. In Bitcoin ETF’s case, traders are actively trading its shares, indicating that the market is still active.

Meanwhile, other industry leaders like Nate Geraci have expressed optimism that Bitcoin ETFs will garner more attention. In a March tweet, Geraci explained that the financial product will soak up more money when adopted by brokerage firms and Registered Investment Advisors (RIA). Recall that the Hong Kong government recently endorsed Bitcoin ETFs, enabling local investors to tap into the investment vehicle.

BTC Down About 10%

The recent activities within the spot Bitcoin ETF market have had a ripple effect on BTC’s price, as it dropped by about 10% within a week. At press time, the leading cryptocurrency traded at $63,100.

The price decrease is also unsurprising as the Bitcoin halving event inches closer.

Mishael Nwani

Mishael Nwani is an avid crypto enthusiast with nearly four years of experience in the industry. Since 2022, he has covered topics across cryptocurrencies, NFTs, artificial intelligence, and financial markets.