Bitcoin ETF Buyers Are 'Paper Hands' And 'Will Sell When They Start Losing Money,' Analyst Claims

Spot Bitcoin BTC/USD ETF buyers may be mostly self-directed retail investors and not institutional traditional finance investors, according to Jim Bianco from Bianco Research.

What Happened: In his latest social media thread, Bianco highlighted BlackRock executive Samara Cohen sharing that most Bitcoin ETF transactions involve self-directed investors utilizing online brokerage accounts. This claim is supported by data showing the average size of a spot Bitcoin ETF trade to be just $14,600, significantly smaller than trades seen with more established ETFs like SPY.

"This is exactly what you'd expect if the buyer is a retail Degen," noted Jim Bianco, emphasizing that TradFi is largely not participating yet.

Bianco further noted that the average trade size will only increase when institutional investors start trading in larger volumes, which is not currently happening. He highlighted a trend where most retail investors in Bitcoin ETFs have transitioned from on-chain accounts to regulated brokerage platforms.

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The following chart shows that the average size of a Spot BTC ETF trade (blue) is just $14.6k, far less than any other ETFs that are very popular with Tradfi … and about one-tenth the size of a SPY trade.

This is exactly what you'd expect if they buyer is retail Degens. pic.twitter.com/m2XjrAzG9D

— Jim Bianco (@biancoresearch) June 18, 2024

Also Read: Bitcoin Spot ETFs See $146M Outflows On Monday For 5th Outflow Day In 6

Why It Matters: The predominance of retail investors in Bitcoin ETFs is crucial because they are historically more prone to panic selling compared to institutional investors, Bianco warned. "Retail Degens are paper-hands and will sell when they start losing money, more so than TradFi," he notes,  which could cause increased volatility in the Bitcoin market.

The average purchase price for these Bitcoin ETFs since they started trading last January is approximately $61,000. Bianco noted that while current Bitcoin prices haven’t reached this level yet, it’s a critical threshold to monitor.

Bianco pointed out that recent trends show Bitcoin ETF outflows over the last six days, coinciding with falling prices. The next significant macroeconomic event, the FOMC meeting, is scheduled for July 31. This upcoming event could once again influence market sentiment and prices.

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: Peter Schiff Trains His Guns At Bitcoin Spot ETFs Once Again: What Happens ‘When Buyers Get Tired Of Waiting And Become Sellers Too?’

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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