$BTC and $ETH ETFs Could Stabilize the Market – What Does This Mean?
- Bitwise recorded ETP (Exchange Traded Product) inflows worth millions of dollars on Monday from the buy-and-hold' type of investors.
- ETF managers believe Bitcoin ($BTC) and Ethereum ($ETH)investors can stabilize the crypto marketthrough better risk tolerance and long-term investments.
- ETF investors can also cause significant volatility (especially for crypto) when rebalancing their portfolios.
$BTC and $ETH ETFs could stabilize the market as institutional investors tend to prioritize long-term investments.
With $BTC falling below $49.5K and $ETH below $2.2K on Monday, weak-hands' investors sold at a loss. The market recovered somewhat, but not enough to justify significant confidence.
However, that might change with $BTC and $ETH ETFs.Institutional investors could control the crypto market's volatility through strategic trades, a higher risk tolerance, and long-term investments.
Let's see why BTC and ETH ETFs could stabilize the market and whether crypto is heading for greener pastures.
ETFs Are Helping to Offset Sell-Pressure' and Calming FUDETFs help dampen volatility by bringing more investors into the market, providing additional liquidity for buying and selling the asset.Ryan Rasmussem, Head of Research at BitwiseETF providers are noticing a pattern - ETF investors are the buy-and-hold' type who aren't cowed by short-term fear, uncertainty, and doubt (FUD).
Bitwise had ETP inflows worth millions of dollars on Monday and claimed the demand was helping to offset sell-pressure.' This was referring to the market-wide panic-selling happening at the same time.
Patrick Pan, CEO of OSL (Hong Kong ETF custodian), says, This shift towards institutional investment has contributed to a more stable market.'
Eric Balchunas, senior analyst at Bloomberg, praised $IBIT (iShares Bitcoin Trust) ETF investors for refusing to sell their stocks on Monday, comparing them to the degen' day traders.
So $IBIT investors woke up on Monday to a -14% move over wknd after stomaching an 8% decline the week prior and what did they do? ABSOLUTELY NOTHING. $0 flows. Compared to some of these degens these boomers are like the Rock of Gibraltar. You guys are so lucky to have them. pic.twitter.com/Qqg9Y2E40k
- Eric Balchunas (@EricBalchunas) August 6, 2024
According to Patrick Pan, the market will mature and become less volatile as more institutional investors invest in crypto.
It makes sense, given the long-term vision of ETF traders who have witnessed far riskier asset dumps. Time in the market is almost always preferable to timing the market.
We're Not Out of the Woods Yet - Crypto Correction Incoming?While ETF investors tend to play the longer game, they also rebalance their portfolios at the end of a month, quarter, or year.
This can significantly impact the market, leading to more volatility and causing FUD for those unprepared. Crypto is especially vulnerable to this, as the market depth varies a lot.
References- Bitcoin and Ethereum ETFs May Reduce Market Volatility, Providers Say (Decrypt)
- Eric Balchunas X Post About $IBIT Investors (X)
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