Are Bitcoin ETFs Failing? Bianco Research CEO Answers

• Jim Bianco claims $BTC ETFs haven't hit the mark yet, as many holders are recording losses and institutional adoption is low.
• Eric Balchunas disagrees with his analysis, claiming that $BTC ETFs have made incredible achievements. Bryan Ross, another analyst, is bullish on ETFs following more FOMO.
• A key reason for the lack of ETF adoption among whales could be the lack of self-custody solutions.

Despite all the investor hype, why are Bitcoin ETFs not widely adopted yet? Bianco Research CEO (Jim Bianco) might have an answer or three:

1. Holders are recording losses.
2. Institutions aren't investing in them.
3. Average trade size has fallen to below $12K.

Bianco claims ETFs are small tourist tools' and not the adoption vehicle we've been promised. However, he estimates the 2028 Bitcoin halving and increased on-chain development could drive ETF adoption higher.

Other analysts, like Eric Balchunas (senior Bloomberg ETF analyst), disagree vehemently. Let's see how the Bitcoin ETF market is looking and why Bianco is so blunt.

ETFs Just a Small Tourist Tool,' Not a Serious TradFi Contender?

In a series of eight posts on X, Jim Bianco concludes that spot $BTC ETFs haven't become a tool for TradFi or boomer adoption.'

He shows the downfall of $BTC ETFs in several ways:

• Spot $BTC ETFs are down by 25.8%, from $62B in June to $46B today.
• The ETF market recorded over $1B outflows in the last eight days.
• Spot ETF holders have a $2.2B unrealized loss.
• The average trade size is under $12K, the lowest since March.
• Around 85% of $BTC ETF adoption is not from TradFi institutions.
• Almost 80% of $BTC ETF purchases were possibly self-directed online accounts.

Last Tuesday, $BTC ETFs had lost $287.8M, but the negative trend continued until the end of the week. In total, ETFs lost $706.1M during the first week of September, with another $479.8M during most of the last week in August (Tuesday-Friday).

A possible cause for this dump is the non-custodial crypto ETF ownership. Whales are more aware than ever of the importance of self-custody (holding your own keys).

Until we see an ETF that offers non-custodial ownership, $BTC ETFs could have a tough time attracting the big players.'

Are Bitcoin ETFs cracking under the pressure, and will they recover? Other analysts disagree with Bianco's verdict on ETFs, so they might have an answer.

Eric Balchunas: $IBIT Has Like $20B in Assets.' Not a Failure

Analysts were quick to respond to Bianco's X post. Some supported his analysis, while others offered a rebuttal. Eric Balchunas (a senior ETF analyst at Bloomberg) responded to another userwho shared Bianco's analysis and called $BTC ETFs a failure.'

Balchunas calls into question the logic of calling $BTC ETFs a failure when $IBIT (BlackRock's $BTC ETF) raised $20B in eight months.

$FBTC has over $10B inflows, and $ARKB and $BITB have $2B each. With these four $BTC ETFs alone, the net inflows are over $34B in eight months.

Bryan Ross (another crypto analyst) also disagrees with Bianco's assessment, saying that institutions could focus on $BTC ETFs next time FOMO hits the market.

if most ETF trades are NOT institutional, this means institutions aren't even here yet, and we could see massive institutional inflows next time FOMO and greed show up.Bryan Ross

Are these analysts right, and is Bianco too harsh on a product that's not even a year old?

Conclusion - $BTC ETFs Might Need More Time

The crypto market has gone through some ups and downs in recent months. The total market cap fell under $2T recently, and $BTC is still under $60K.

So, it's not a surprise that $BTC ETFs followed suit. However, thatmakes them no less crucial for the industry nor a failure.

We believe the lack of non-custodial ETF holding is a primary contributor to the ETF dump we're seeing. With all the crypto scams running around, not holding your keys is an immediate red flag for many.

We'll see what happens next and whether $BTC ETFs will recover.

References

• Jim Bianco X Post About $BTC ETFs (X)
• Bitcoin ETF Performance Chart (Farside Investors)
• Eric Balchunas X Post Responding to an X User Sharing Bianco's Analysis (X)
• Bryan Ross X Post Responding to Bianco's Analysis (X)

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