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- Bitcoin And Ethereum ETF Flows - Dec 18
Quick Recap
It’s been ~2 weeks since our last check in on the ETH and BTC ETF flows which you can revisit below:
In my last piece I noted the bullish flows had returned to the ETH ETF and the BTC ETF was still firing on all cylinders. I concluded last week’s piece with this:
As we approach Q1 2025, I wouldn't be surprised to see TradFi discussions around the ETH "catch-up trade" gaining traction.
I think we’re already starting to hear these types of discussions at the institutional level. Read on to see what I mean.
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Recent Ethereum ETF Flows
Ethereum ETF flows have been highly net positive everyday in December so far.
See the data below from Farside:
($) millions
Since November 22nd, flows into the ETH ETF have been positive every single day. Additionally, the ETH ETF is benefiting from the slowing outflows of the Grayscale ETHE product, a factor I’ve mentioned previously. This trend is illustrated in the chart below, where you can see these outflows beginning to level off:
What We’re Seeing:
The ETH ETF product has clearly come into favor over the last three weeks. It’s become clear that TradFi is starting to get more comfortable with this asset. One firm that has had their finger on the pulse is Bitwise, an asset management firm and one of the one of the institutional leaders in the crypto space. Check out what Juan Leon and Ryan Rasmussen from Bitwise had to say:
$2.3B net inflows over past 3 weeks vs $26M over preceding 4 months. Investors are gearing up for ETH's resurgence in 2025.
— Juan Leon (@singularity7x)
9:31 PM • Dec 17, 2024
A common phrase in financial markets and investment communities is "narrative follows price." One of the strongest marketing tools for an asset is its rising price. For various reasons, people hesitate to buy when prices are low but prefer to invest once the idea is validated and prices are high.
To revisit the concept of the “catch-up trade,” consider the bullish long-form memo Bitwise just distributed to their institutional clients:
Recent Bitcoin ETF Flows
The Bitcoin ETF flows have been the model of consistency for a while now.
See the data below from Farside:
($) millions
The Bitcoin ETF continues to impress.
Check out what Nate Geraci said yesterday:
IMO, highly noteworthy comment today from @JSeyff & @EricBalchunas…
“Bitcoin ETFs can *triple* the size of gold ETFs long term.”
US gold ETFs currently at approx $125bil.
Spot btc ETFs nearing $120bil.
Sounds wild, but I agree. Could be even more.
— Nate Geraci (@NateGeraci)
1:26 AM • Dec 18, 2024
What We’re Seeing:
Bitcoin is currently experiencing unparalleled tailwinds. A multitude of factors are working in its favor, including:
The Michael Saylor/MSTR effect
New political regime with a more crypto friendly stance
Beginning of a new credit cycle
Beginning of a new Bitcoin cycle (typically 6 months after halving event - April 2024)
A potential Strategic Bitcoin Reserve (tons of knock on effects to this)
FASB officially adopting Fair Value Accounting for Bitcoin for fiscal years beginning after Dec 15, 2024
There’s so many I’m likely missing some, but the fact is Bitcoin is taking its place as a major global asset. It's truly remarkable to see the graphic below and realize that Bitcoin is on track to surpass companies like Google and Amazon.
Pretty soon the two largest assets on this list will have no country affiliation
Conclusion
Ethereum ETF purchases are rapidly increasing compared to Bitcoin. Although the ETH ETF launched later and, like the BTC ETF, had to manage Grayscale outflows, both ETFs are now experiencing positive net inflows almost every day. This consistent activity creates a reliable and substantial daily demand for both ETH and BTC.
For a long time, TradFi professionals faced career risk for engaging with crypto. However, the current landscape suggests that the greater career risk lies in not being exposed to this new asset class and being caught offsides.
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