Zinger Key Points
- Jim Bianco says spot Bitcoin ETFs held mainly by "paper-handed" retail; selling pressure if BTC drops below $58k average purchase price.
- Balchunas pushes back, argues institutional adoption takes time, and major players like BlackRock, Fidelity can attract advisors.
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Jim Bianco, founder of Bianco Research, expressed his growing concerns about the risks involved with spot Bitcoin ETFs, pointing to potential significant selling pressure ahead.
What Happened: Bianco suggested on social media that these ETFs are primarily held by “paper-handed small-time traders” rather than institutional investors.
Traders may be inclined to sell if the price of Bitcoin drops below their average purchase price.
Bianco points out that investment advisors (IAs), who typically hold around 35% of all ETFs, currently hold less than 1% of the new Bitcoin spot ETFs. This observation contradicts the “boomers are coming” narrative prevalent during the March peak, indicating that institutional investors have not embraced these ETFs as expected.
“99% of the BTC ETF holders are: Not institutional investors (>$100m), Retail, HFs (in comings 13Fs),” Bianco states, highlighting the dominance of retail investors and hedge funds in these ETFs. He further notes that the average trade size for Bitcoin ETFs is just $14,000, less than half of the next smallest ETF, suggesting that “degen retail” investors are the primary buyers.
According to Bianco’s analysis, the average purchase price for these investors is around $58,000, approximately 10% below current levels. He warns that if the price of Bitcoin drops below this threshold, it could trigger significant selling pressure from these “paper hands” investors, who are known to chase momentum and sell at the first signs of trouble.
Bianco acknowledges the potential benefits of Bitcoin and Ethereum ETFs but points out that they act as “orange FOMO poker chips” and can actually work against the primary goal of building an alternative to the current traditional finance system.
Why It Matters: Bloomberg ETF analyst Eric Balchunas rebelled against Bianco’s thesis. He points out that that it’s too early to draw definitive conclusions about the long-term prospects of these ETFs.
The majority of quarterly reports filed by institutional investment managers have yet to be submitted, Balchunas notes. There are already around 150 advisors from across the country who have reported owning a spot ETF, and this number could potentially reach over 500 by the May 15 reporting deadline.
Most advisors are currently “nibbling” rather than taking “big bites,” Balchunas says, noting how it takes time for institutional investors to build significant positions.
Balchunas also emphasizes that the current data only represents the first quarter of these ETFs’ existence. “Advisors move slower than retail,” according to Bianco, suggesting that it’s premature to draw conclusions based on such a short time frame.
He cautions against “dying on this hill” by going against the likes of BlackRock, Fidelity and Invesco. Those firms have significant wholesaling firepower, relationships and a strong ETF track record.
What’s Next: Benzinga’s upcoming Future of Digital Assets event on Nov. 19 will likely explore these topics.
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Benzinga editors reviewed and published this content, which was partially produced using AI tools.
Image created using artificial intelligence with Midjourney.
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