According to analysts at Bernstein, the recent slowdown in Bitcoin ETF flow is just a temporary pause and will soon resume. The firm remains bullish on BTC and suggests that the denial of an ether spot ETF could actually be a positive development for ether.
Bernstein, a research and brokerage firm, has reassured investors who are concerned about the decline in Bitcoin ETF inflows, stating that this is only a temporary slump. The launch of Bitcoin spot ETFs was a major catalyst for the asset and has contributed to its impressive 46% returns year-to-date, along with the recently completed Bitcoin halving.
After reaching a peak of $1.05 billion on March 12, inflows into the ETFs have slowed down. This coincided with a rally in BTC prices, reaching $73,836. The prices have remained correlated to the flow, and the recent drop in inflows has led to a slump in BTC prices to $62,600.
As of now, BTC is trading at $62,700 after experiencing a 1.2% drop in the last 24 hours. This has caused the leading cryptocurrency to extend its weekly losses by 6%.
The recent drop in BTC prices is attributed to disappointing demand after the halving and a decrease in inflows, signaling a decline in investor interest. However, Gautam Chhugani and Mahika Sapra, analysts at Bernstein, believe that the slowdown in Bitcoin ETFs is not a concerning trend but rather a short-term pause before ETFs become more integrated with private bank platforms, wealth advisors, and brokerage platforms.
While institutional interest in BTC is undeniable, investors remain cautiously optimistic. They are concerned about the short-term trend but have a largely bullish long-term outlook.
The analysts predict that Bitcoin will establish itself as an acceptable portfolio allocation investment and that platforms and regulators will establish compliance frameworks to offer ETF products. With ETF inflows expected to continue rising, the analysts forecast a price of $150,000 for BTC by the end of 2025. They cite the more than $12 billion of spot Bitcoin ETFs accumulated so far and the healthy network position following the halving as factors supporting their bullish outlook.
In terms of the possible approval of a spot ether ETF, the analysts argue that if the SEC denies its approval, this could actually attract new investment. They suggest that a denial would likely lead to litigation and draw attention to ether, potentially attracting investors. After underperforming against Bitcoin in 2024, the risk-reward for ether could be attractive to investors. The analysts also suggest that this could lead to positive performance for “ETH-beta” Layer 2 tokens such as Arbitrum, Optimism, and Polygon.
The analysts also highlight promising crypto niches, such as DeFi and gaming. They mention that Solana leads in USDC payments, while Chainlink supports tokenized assets like treasuries. They expect the total crypto market cap to triple to $7.5 trillion in the next two years.
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