Bitcoin (BTC) experienced a 23% gain in the five days ending Feb. 28, but BTC options traders are reluctant to adopt a bullish stance. This is partly due to the fact that the last time Bitcoin incurred a 5% weekly loss was more than five weeks ago, leading to a demand for downside protection.
Traders fear reduced spot Bitcoin ETF inflows and a recession in the U.S.
Concerns arise among investors about the potential decline in the heavy inflow into spot Bitcoin exchange-traded funds (ETF), which could trigger a price correction. This suggests that these traders are either unconvinced by the current bull run or perceive no need for leverage in the face of macroeconomic uncertainty.
On Feb. 28 alone, U.S. Bitcoin ETFs saw a net inflow of $673 million, accumulating a total of $7.4 billion in net deposits since their launch on Jan. 11. Bloomberg’s senior ETF analyst, James Seyffart, reported this information, highlighting that only 150 ETFs have ever surpassed the $10 billion mark in assets under management. Notably, BlackRock’s iShares Bitcoin ETF already boasts over $9 billion in assets, according to Nate Geraci, co-founder of the ETF Institute.
Interpreting this data yields two distinct perspectives. Some argue that such inflows may not be sustainable in the long run, either due to slowing demand as Bitcoin’s price rises or because there is a limit to the risk appetite for cryptocurrency exposure. Conversely, from a bullish standpoint, certain traders believe in a “snowball effect” where the increasing Bitcoin price “further inspires” ETF sales, as suggested by JP Morgan analysts.
JPM makes a strong point here. ETF inflows are a snowball effect. Bitcoin narrative is sticking. Blackrock knows this. Everybody plainly sees it. Now they’re about to deploy the world’s best sales team on leveling up the fund. We’re still in the 1st inning. Halving in pic.twitter.com/AEjCEXPNEN
— Beanie (@beaniemaxi) February 29, 2024
Trader beaniemaxi expressed their opinion on X social network, suggesting that both BlackRock and the remaining spot ETF issuers have incentives to deploy their sales teams because the…
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