Analysts at Bernstein have assured investors that the slowdown in Bitcoin ETF flow is a temporary pause with resumption imminent.
The firm offers a bullish outlook for BTC and further argues that the denial of an ether spot ETF could be bullish for ether.
With investors raising concern over the falling Bitcoin ETF inflows, research and brokerage firm Bernstein has offered assurance that this is a temporary slump. The launch of Bitcoin spot ETFs was one of the most bullish catalysts for the asset. The ETF launch and the recently completed Bitcoin halving have seen the digital asset deliver 46% returns YTD.
After peaking at $1.05 billion on March 12, flow into the ETFs has slowed. This coincided with a BTC rally to $73, 836. Prices have remained correlated to the flow, with the recent drop in inflows leading to a BTC slump to $62,600.
At the time of writing, BTC is trading for $62,700 after a 1.2% drop in the last 24 hours. This has seen the leading cryptocurrency extend its weekly losses by 6%.
The recent drop is attributed to a disappointing demand after the halving as well as a drop in inflows, signaling falling investor interest.
Gautam Chhugani and Mahika Sapra wrote in a note to clients on Monday:
We don’t expect the Bitcoin ETF slowdown to be a worrying trend, but believe it is a short-term pause before ETFs become more integrated with private bank platforms, wealth advisors, and even more brokerage platforms.
Although institutional interest is undeniable, investors are cautiously optimistic. Investors are concerned about the short-term trend with the long-term outlook remaining largely bullish.
The analysts foresee the establishment of Bitcoin as an acceptable portfolio allocation investment and for platforms and regulators to establish compliance frameworks to offer ETF products. With ETF inflows expected to keep rising, the analysts offer a $150,000 price prediction by the end of 2025. The analysts cited the more than $12 billion of the spot Bitcoin ETF accumulated so far. In addition, the healthy network position following the halving points to a bullish outlook.
Spot Ethereum ETF Risk-Reward Looks Attractive
Speaking on the possible approval of a spot ether ETF, the analyst revealed that if the SEC denies its approval, this could attract new investment. Chhugani and Sapra argue that a denial of the May 23rd decision would likely lead to litigation, drawing attention to ether. After underperforming against Bitcoin in 2024, the risk-reward could attract investors. They further add that this could further attract positive performance for “ETH-beta” Layer 2 tokens such as Arbitrum, Optimism, and Polygon.
Additionally, analysts say crypto niches like DeFi and gaming show promise. 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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