How bitcoin price's newest source of long-term support is evolving
Bitcoin may have come off the all-time high it hit in May, but the cryptocurrency is still trading above $100,000, and doing so with more consistency. Bitcoin recently held above $100,000 for 30 days, even with a 10% pullback, the first time that's ever happened. A look at the bitcoin price chart this years show that it has more or less been through a V-shaped recovery, with its early gains wiped out but a sharp turn back up to the recent all-time high, close to where it remains today.
Plenty of reasons are offered for the ups and down in what has always been a volatile trade, but the biggest bitcoin ETF manager and a financial advisor who follows the cryptocurrency closely say that one source of price support that is new and won't go away is the steady, if cautious, adoption of bitcoin by financial advisors and institutional investors.
After a recent week during which bitcoin ETFs suffered outflows, the bigger story remains the significant inflows this year. At iShares, the Bitcoin Trust (IBIT) had its second-highest monthly flows ever in May, at $6 billion. This year, the ETF has taken in close to $12 billion in all, and over every short-term time period — one-week ($600 million), one-month ($4.8 billion), three-month ($9.6 billion), the flows are up, according to flows data from ETFaction.com.
"The iShares bitcoin ETF numbers are remarkable," Nate Geraci, president of the ETF Store, an investment advisor that focused on using ETFs for portfolio construction and management, said during a recent CNBC "ETF Edge" segment.
It's not just the $6 billion May month he was referring to, but the fact that day-in and day-out the iShares Bitcoin Trust (IBIT) has been taking in money and is among the top five ETFs in flows across the entire industry this year. "It's only been on the market for 17 months and it's at $70 billion," Geraci said — $72 billion, as of June 12.
Geraci says what is taking place in the market relates to a few factors. Becoming decoupled from the broader markets in recent weeks has helped to make a case for the asset class as one with lower correlation to other assets. But is also a testament to how financial advisors and institutional investors adopt a new asset class and, over time, they are becoming "much more comfortable with the idea of owning bitcoin in a diversified portfolio," he said.
"It's a process with any new asset class," Geraci said. "Advisors and institutions don't just jump in without looking. There is education and a due diligence process and now we're hitting the point where investors are becoming more comfortable," he added.
At No. 5 in flows among all ETFs year-to-date, it's only the two giant S&P 500 ETFs, VOO and SPY, an ultrashort treasuries ETF, SGOV, and the Vanguard Total Stock Market ETF, that are ahead of the iShares Bitcoin Trust.
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