Benzinga - by Khyathi Dalal, Benzinga Staff Writer.
Jim Bianco of Bianco Research doubled down on his warning that spot Bitcoin (CRYPTO: BTC) ETF buyers might soon cause significant selling pressure for the market.
What Happened: Bianco pointed out that the average purchase price of spot Bitcoin ETF buyers is between $57,000 and $58,000, implying that around $37 billion in spot BTC assets (excluding GBTC) are currently sitting at break-even or a small loss.
1/6As this chart shows, the current BTC price is the average purchase price of the Spot BTC ETF buyers. ~$57K to ~$58K pic.twitter.com/Ynafwt6qnO
— Jim Bianco (@biancoresearch) May 1, 2024
Bianco emphasized that most of these ETF buyers are not institutional investors but rather hedge funds, smaller institutional investors holding less than $100 million, and, most notably, retail "degens." This concentration raises concerns about the stability of the market.
Bianco pointed out that the ETFs have acquired an astonishing 8.5% of the Bitcoin supply that moved in the last year, and they accomplished this feat in just four months. However, the price has only increased by 25% since the ETFs started trading on January 11. Bianco sees this as a potential red flag for the market.
Also Read: Spot Bitcoin ETFs Bled Another $162 Million On Tuesday
Why It Matters: Bianco compared the Bitcoin ETFs to other non-U.S. equity ETFs. He states that he couldn’t find any international stocks, gold, bonds, commodities or other alternatives with 8.5% of their underlying market’s effective supply, let alone acquire that supply in such a short timeframe.
Looking ahead, Bianco suggests monitoring how many of these ETF holders, particularly the retail "degens," will start selling their positions. While not all $37 billion in the ETFs are at risk of being sold, Bianco noted that when the ETFs were last at a loss in January, they sold 40% of their previous buying peak.
This selling pressure could have a significant impact on the Bitcoin market shortly.
What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.
Read Next: Bitcoin Plummets Below $58K, ETH, SOL, DOGE Follow: Over $400M Liquidated In ‘Deepest Retrace In The Cycle’
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