Cryptocurrency analyst known as il Capo of Crypto shared his views on the recent inflows into Bitcoin spot ETFs.
While many consider BTC inflows into these funds to be bullish, il Capo of Crypto questions the extent of this optimism. These inflows represent capital entering the ETF, he says, but are not an increase in the funds' reserves.
When ETF inflows occur, it means investors are buying more shares of the fund, which can lead the fund manager to buy more of the underlying assets (BTC) to fit the fund's investment strategy. However, if these assets have already been purchased, the inflows do not directly reflect demand.
An important question raised by il Capo of Crypto is whether fund managers hold BTC for themselves or just for the fund. The analyst argues that institutional investors looking to get into BTC have probably already done so.
According to the analyst, it remains unclear whether those who buy BTC through ETFs are institutions or individual investors. Major companies such as BlackRock and Fidelity have not disclosed whether they hold BTC for themselves. There was no mention of any major institutions entering the market other than offering a product like ETFs.
As a result, il Capo of Crypto suggests that fund managers act like an exchange and keep the volume fees generated in their funds. ETFs can also be shorted, the analyst reminded, and managers don't care whether those fees are earned when the price rises or falls.
*This is not investment advice.