U.S. Bitcoin ETFs ‘pulling money off-chain’ into TradFi: Analyst

• Analyst have downplayed the long-term positive impact of the U.S. BTC ETF.
• Instead, the analyst viewed the BTC ETFs as benefiting TradFi and a threat to DeFi. 

Bitcoin [BTC] went from around $40K to a new all-time of $73.7K on the back of the approval of U.S. spot BTC ETFs.

The massive flows from institutions through the ETFs have been long viewed as a bullish catalyst for BTC price action. 

However, Jim Bianco, a macro investment research analyst, downplayed the ETFs’ ‘bullish’ catalyst narrative.

Instead, Bianco termed the BTC ETFs as ‘pulling the money off-chain’ into TradFi, especially in Q1. 

“My other concern was that these instruments (ETFs) would not lead to on-chain adoption but instead drag money back into the TradFi world. $COIN Q1 earnings offered hints this might be the case. Coinbase revenue surges to $1.64 billion – But retail volume just 50% of 2021 levels”

According to Bianco, the Q1 BTC ETF trend was ‘pulling money off-chain into the Tradfi world’ and could undermine a new DeFi system. 

Bianco’s bearish take on U.S. Bitcoin ETFs

Bianco’s bearish stance on U.S. BTC ETF contradicted Michael Saylor and Bitwise CIO Matt Hougan’s positions. 

For his part, Michael Saylor viewed U.S. BTC ETFs as a way to move capital from TradFi into digital assets, fueling BTC’s competitiveness. 

Similarly, Hougan, based on the 13F filings, noted that large firms bought $10.7 billion of the U.S. BTC ETFs in Q1. To Hougan, the amount was a ‘down payment,’ and he expected more to come. 

However, Bianco took a contrarian position and cited two other factors for his argument. Notably, investment advisors’ holdings of BTC ETF in Q1 were below average to inspire the bullish catalyst narrative. 

“They (Investment advisors) are very small, between 2.5% and 4% (and 8.81% for $GBTC). A recent Citi report says the AVERAGE ETF is about 35% owned by investment advisors.”

Source: X/Jim Bianco

He also claimed that BTC ETFs aren’t recording massive demand as expected, and the long-term impact of BTC ETFs could have been far-fetched.  

“If anything, it is concerning that the headlong rush into Spot BTC ETFs “only” drove this price back to the old high (of November 2021) and not $100k.”

In the meantime, BTC’s short-term recovery eased near the supply area below $68K. Should bulls clear the hurdle, an extended recovery to the range-high of $71K could be feasible.