According to industry observers, the global wealth management industry is showing little interest in both bitcoin and gold. Amidst expectations of an early pivot by the Federal Reserve (Fed) in favor of liquidity easing, Bitcoin (BTC) funds are experiencing a decline in coins as US bank failures exacerbate the situation.
ByteTree Asset Management’s data shows that close-ended funds, spot and futures-focused exchange-traded funds (ETFs) in Europe, the US, and Canada have lost 16,560 BTC ($409 million) this month, reaching a 17-month low of 826,113 BTC.
ETFs and other investment vehicles that offer exposure to Bitcoin without owning the cryptocurrency are believed to be a proxy for institutional activity.
The drop in fund balances implies a lack of institutional participation in Bitcoin’s recent surge, reportedly fueled by safe-haven demand and renewed hopes for Fed rate cuts in the year’s second half.
The gains are evidence of Bitcoin’s strengthening appeal as a hedge against the banking system. Yet some observers believe that institutions are not convinced that BTC is serious and here to stay.
Charlie Morris, the Chief Investment Officer at ByteTree Asset Management, stated that the data shows a lack of interest from institutions in BTC.
However, Morris cautioned against making any conclusions from the data. He points out that a large outflow from a single fund was responsible for dragging the tally lower.
He also noted that the decline in the balance held in funds does not necessarily mean that the price rally lacks strength and is unsustainable.
Markus Thielen, the Head of Research and Strategy at Matrixport, supported this view. He stated that the balance held in funds accounts for only a small portion of the total market. Moreover, other sources of demand are driving prices higher.
He believes that the fund holdings data is insignificant and suggested that USDC holders are converting their stablecoin into BTC.
Recently, Binance announced converting $1 billion worth of funds held in BUSD to bitcoin, BNB, and ether. While the decline in fund balances might be a cause for concern, it is essential to note that Bitcoin and gold remain attractive to retail investors and may continue to rise in value over time.
The wealth management industry’s lack of interest in Bitcoin and gold could be an opportunity for retail investors to take advantage of the price surge.
Nonetheless, it is essential to approach the market cautiously and conduct thorough research before making investment decisions.
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