Bernstein analysts have reassured investors that the slowdown in Bitcoin ETF flow is merely a temporary pause and will soon resume. The firm holds a bullish outlook for BTC and also suggests that the denial of an ether spot ETF could actually be beneficial for ether.
To address concerns from investors regarding the decrease in Bitcoin ETF inflows, Bernstein, a research and brokerage firm, has provided reassurance that this is just a temporary decline. The launch of Bitcoin spot ETFs was one of the most positive catalysts for the asset. Since the ETF launch and the recent completion of the Bitcoin halving, the digital asset has delivered a YTD return of 46%.
After reaching a peak of $1.05 billion on March 12, the flow into the ETFs has slowed down. This coincided with a BTC rally to $73,836. The prices have remained correlated to the flow, and the recent decrease in inflows has resulted in a BTC slump to $62,600.
As of now, BTC is being traded at $62,700 after experiencing a 1.2% drop in the last 24 hours. This has caused the leading cryptocurrency to extend its weekly losses by 6%.
The recent decrease is attributed to disappointing demand after the halving, as well as a drop in inflows, indicating a decline in investor interest. In a note to clients on Monday, Gautam Chhugani and Mahika Sapra stated, “We don’t expect the Bitcoin ETF slowdown to be a concerning trend, but rather view it as a short-term pause before ETFs become more integrated with private bank platforms, wealth advisors, and even more brokerage platforms.”
While institutional interest in Bitcoin 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 Bitcoin will establish itself as an acceptable portfolio allocation investment, and platforms and regulators will develop compliance frameworks to offer ETF products. With the expectation of increasing ETF inflows, the analysts have a price prediction 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 the healthy network position following the halving, as reasons for their bullish outlook.
Regarding the potential approval of a spot ether ETF, the analysts revealed that if the SEC denies approval, it could attract new investments. Chhugani and Sapra argue that a denial of the May 23rd decision would likely result in litigation, bringing attention to ether. After underperforming against Bitcoin in 2024, the risk-reward ratio could attract investors. They also suggest that this could lead to positive performance for “ETH-beta” Layer 2 tokens such as Arbitrum, Optimism, and Polygon.
In addition, analysts believe that crypto niches like DeFi and gaming show promise. Solana leads in USDC payments, while Chainlink supports tokenized assets like treasuries. They anticipate that the total crypto market cap will triple to $7.5 trillion in the next two years.