Bernstein analysts have reassured investors that the recent slowdown in Bitcoin ETF flow is only temporary and that it will soon resume. The firm has a positive outlook for BTC and argues that the denial of an ether spot ETF could actually be beneficial for ether.
Concerns have been raised by investors regarding the decrease in Bitcoin ETF inflows, but Bernstein, a research and brokerage firm, has provided assurance that this is just a temporary slump. The launch of Bitcoin spot ETFs has been one of the most positive factors for the asset. Since the launch of the ETFs and the recent Bitcoin halving, the digital asset has delivered impressive returns of 46% year-to-date.
The flow into the ETFs reached a peak of $1.05 billion on March 12, but has since slowed down. This coincided with a rally in BTC prices to $73,836. The prices have remained closely correlated to the flow, and the recent decrease in inflows has led to a slump in BTC prices to $62,600.
At the time of writing, BTC is trading at $62,700 after a 1.2% drop in the last 24 hours. This has caused the leading cryptocurrency to extend its weekly losses by 6%.
The recent drop in BTC prices is attributed to disappointing demand after the halving, as well as a decrease in inflows, indicating a decline in investor interest. In a note to clients on Monday, Gautam Chhugani and Mahika Sapra wrote, “We don’t expect the Bitcoin ETF slowdown to be a concerning trend, but rather a temporary pause before ETFs become more integrated with private bank platforms, wealth advisors, and even more brokerage platforms.”
While institutional interest in BTC is undeniable, investors remain cautiously optimistic. They are concerned about the short-term trend, but the long-term outlook remains largely positive. The analysts predict that BTC will become an accepted portfolio allocation investment and that platforms and regulators will establish compliance frameworks to offer ETF products. With ETF inflows expected to continue rising, the analysts predict a price of $150,000 by the end of 2025. They cited the accumulation of over $12 billion in spot Bitcoin ETFs so far, as well as a strong network position following the halving, as indicators of a positive outlook.
In terms of a spot ether ETF, the analysts believe that if the SEC denies its approval, it could attract new investment. Chhugani and Sapra argue that a denial of the May 23rd decision would likely lead to litigation and bring attention to ether. After underperforming against Bitcoin in 2024, the risk-reward ratio for ether could attract investors. They also suggest that this could positively impact “ETH-beta” Layer 2 tokens such as Arbitrum, Optimism, and Polygon.
The analysts also note that crypto niches like DeFi and gaming show promise. Solana is leading 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.
