HODL on: 95% of Spot BTC ETF Investors Held Firm Through Market Correction

HODL on: 95% of Spot BTC ETF Investors Held Firm Through Market Correction
  • According to Bloomberg Analyst Eric Balchunas, 95% of ETF investors flashed their diamond hands during the recent market downturn, holding onto their BTC funds.
  • The news came as Bitcoin showed signs of recovery over the weekend, once again trading above USD $60K.
  • Interestingly, Grayscale’s Bitcoin fund, GBTC, recorded its first positive day of flows since ETFs started trading in January this year.

The market’s response to the recent turbulence can be characterised with two simple words:

Diamond. Hands.

Market swings in either direction will always attract volume, as people panic, liquidate positions or take profits amid shifting sentiment. But as Bitcoin flirted with its USD $60K (AUD $90K) support level, it would’ve been understandable for some of the newer ETF investors to get cold feet.

But, stunningly, the opposite occurred. The suite of Bitcoin ETFs recorded its first ever green day for inflows.  

First time ever 1D flows all green, no red for the Bitcoin Bunch. Not going to spike the football like some did during the outflow period but will point out that over 95% of the ETF investors HOLD-ed during what was a pretty nasty and persistent downturn. Will same happen next… pic.twitter.com/3l3uwwmqGy

— Eric Balchunas (@EricBalchunas) May 6, 2024

Related: Bloomberg: Multiple Australian Spot Bitcoin ETFs Anticipated to Launch on ASX This Year

Grayscale’s GBTC Turns the Corner as Investors Demonstrate Long-term Appetite for BTC

Bitcoin has always been a long-term play for most investors. This can be corroborated by data that shows BTC holders often keep the asset in their wallets for 1Y+ and away from centralised exchanges.

But given the novelty of spot Bitcoin ETFs, and the new investors it attracted, nobody knew for sure how the market would react to its biggest challenge in 2024.

ETF investors aren’t trading. They’re not degens. They expect the volatility, and in for the long term benefit.

When they’re investing 1-5%, the short term downturns also have a minimal effect on overall portfolio.

— Adam Blumberg 🇮🇱 (@Interaxis8) May 6, 2024

Let’s just say it passed with flying colours, as over 95% of Bitcoin ETF hodlers held firm during the past fortnight’s tension.

And now, they’ve been rewarded for their patience. BTC is back above the USD $60K mark and even Grayscale’s GBTC, which has bled money since spot ETFs were approved, recorded a day of positive inflows on Monday. 

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In fact, the change of fortunes for Grayscale’s fund was so spectacular that prominent analyst Eric Balchunas believes the market will probably never see anything like it again.

Balchunas speculates that GBTC’s turnaround is due to the fund having finally shed the majority of sellers, who likely preferred BlackRock’s more cost-effective offering. This, paired with an “extensive marketing budget” may have caused an influx of new investors giving Grayscale its first green day in months.

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