Investors are increasingly turning to Bitcoin exchange-traded funds (ETFs), viewing recent price declines as a strategic buying opportunity. Over the past two trading sessions, US Bitcoin ETFs have experienced a notable net inflow of $438 million, according to data compiled by Bloomberg.
Bitcoin, the original cryptocurrency, has faced a roughly 20% decline since early June, primarily influenced by concerns over a potential supply glut. These concerns have been exacerbated by expectations that creditors of the defunct exchange Mt. Gox may begin selling tokens distributed by the estate.
Charlie Morris, Chief Investment Officer at ByteTree, emphasized the bullish long-term outlook for Bitcoin, attributing recent price pressures to temporary supply dynamics. “So many investors still don’t own Bitcoin, and that underpins the long-term bull case,” Morris wrote in a note. “This supply storm will soon pass.”
Last week, Bitcoin’s decline accelerated following announcements that Mt. Gox administrators initiated the return of approximately $8 billion worth of Bitcoin to creditors. Concurrently, the German Federal Criminal Police Office began selling a portion of the 50,000 Bitcoin seized from a piracy website.
Despite recent challenges, Bitcoin saw a rebound on Tuesday, rising up to 3.3% to reach $58,100. However, it remains significantly below its March record high of $73,000.
Chris Weston, Head of Research at Pepperstone, acknowledged supply concerns but highlighted the market’s awareness of an eventual resolution to the liquidation of these coins. “Supply has been a big concern and the known overhang from the liquidation related to Mt. Gox and the German Federal Criminal Police Office – that said, the markets know there is an endpoint to the liquidation of these coins,” Weston wrote in a note on Tuesday.
The influx of capital into Bitcoin ETFs reflects investors’ confidence in Bitcoin’s long-term value proposition, despite short-term fluctuations driven by supply dynamics. As institutional and retail interest in Bitcoin continues to grow, market participants anticipate ongoing volatility while positioning for potential future gains.
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