Bitcoin ETFs Are ‘A Small Tourist Tool,’ Not TradiFi Adoption Vehicle: Bianco Research CEO

The approval of spot Bitcoin ETFs in January was one of the biggest moves in crypto this year, with funds generating a surge in demand for BTC. However, eight months after their launch, interest in those products appears to be waning.

In a recent post on X, Jim Bianco, the CEO of Bianco Research, stated that Bitcoin ETFs have failed to live up to their pre-launch hype. He pointed out that the assets in all 11 US spot Bitcoin ETFs have plummeted since reaching a peak of $62 billion in June.

According to Bianco’s charts, the cumulative assets under management (AUM) of all Bitcoin ETFs are valued at $46 billion, which is the lowest in over four months. With the increase in outflows, ETF holders are currently sitting on a whopping $2.2 billion unrealized loss.

Not a TradFi Adoption Vehicle – Yet?

Bianco stated that contrary to the popular belief that Bitcoin ETFs would drive mainstream BTC adoption by traditional finance (TradFi) investors, the funds have received “very little new money.” Instead, a majority of the recorded inflows were from “onchain holders moving back to TradFi accounts.”

He noted that the investment giant BlackRock has confirmed the limited presence of financial advisors in the Bitcoin ETF space. Earlier in June, BlackRock’s chief investment officer for index investments, Samara Cohen, said that about 80% of Bitcoin ETF purchases have been made by self-directed investors using online brokerage accounts.

“So far these instruments have not lived up to the hype of ‘here come the boomers.’ Very few have come, and those that have are holding losses and may now be leaving ($1B outflows over the last 8 days),” he noted.

Bitcoin ETFs Need More Time

Bianco further pointed out that Bitcoin ETFs still have the potential to drive TradFi adoption, however, a few things are needed before the market booms.

He speculates that the next Bitcoin halving, which will occur in 2028, and significant development of on-chain tools across DeFi, NFTs, and more will likely drive the adoption of Bitcoin ETFs.

“Patience and another couple of seasons, including a winter or two, and development breakthroughs are needed first,” Bianco concluded.