As the US gears up for the first listing of bitcoin ETFs, Noelle Acheson, Head of Market Insights at Genesis Global Trading Inc, has written an analysis on the likely impact on the bitcoin marketplace.
“Demand for these bitcoin futures ETFs is likely to be disappointing,” Acheson says. “These could be of interest to a limited audience of institutions that can’t hold spot or derivatives directly, as well as retail investors that prefer the familiarity and convenience of ETFs. Most investors, however, are more likely to continue to access BTC exposure through spot or derivatives, or through any of the many listed securities or international funds that offer spot BTC exposure.
“Disappointment from the BTC futures ETF listing could provoke a correction – after other seminal BTC market moments such as the listing of BTC futures on the CME in December 2017 and the listing of Coinbase on Nasdaq in April 2021, the market fell sharply. However, even if there is some sell-off, it is unlikely to be as deep or lasting as the previous examples because of where we are in the market cycle. In both previous cases, the market was already frothy and showing signs of exhaustion – that is not the case this time around.”
She writes that even if there is some selloff, it is unlikely to be as deep or lasting as the previous examples, because of where the market cycle is, at the moment.
“In both cases, the market was already frothy and showing signs of exhaustion. That is not yet the case in this upswing. Comparing today’s market with the last time BTC was at USD60,000 on the way up (mid-April):
• We are not yet seeing strong signs of retail activity.
• The number of active addresses is almost 17 per cent lower.
• The number of daily transactions (seven-day moving average) is over 10 per cent lower.
• The volume of on-chain transfers in transactions worth less than USD1,000 is over 20 per cent lower.
• We are seeing signs of growing institutional and/or whale activity.
• Cash-margined BTC futures open interest (what US-based institutions tend to use) is 35 per cent higher.
• The CME basis – which hints at institutional demand – has gone from being negative in July to over 16 per cent, unusually beating out higher-leveraged exchanges.
• The volume of on-chain transfers in transactions worth more than USD10 million is almost 10 per cent higher.
• And we are a ways off from the frothiness of April.
• The perpetual futures rolling basis (which indicates demand for leverage) is ticking up but is still only 13.8 per cent, vs 34.6 per cent in mid-April.
• The number of new BTC addresses added daily (seven-day moving average) is 18 per cent lower.
• Google search interest in the US for ‘bitcoin’ is approximately half what it was back in April, according to a Google Trends index.
Acheson writes that ETFs will offer BTC exposure to investors that can’t hold spot or derivatives directly, such as certain types of institutional investors as well as retail investors that prefer the familiarity and convenience of ETFs.
“Most institutional investors have many other alternatives that are likely to more closely track the spot price without incurring carry costs and active management fees. Retail investors who want spot exposure can easily buy BTC on PayPal, CashApp, Robinhood, she writes.
“For those that would rather go through a traditional broker, there are several ETFs with high BTC exposure through holdings such as MicroStrategy, Coinbase or any of the listed BTC miners. And there’s the option of holding any of these companies directly.
“The Canadian market shows that demand for futures-based ETFs is miniscule compared to demand for spot-based ETFs.”