Why Is Bloomberg Analyst Bullish on Spot Bitcoin ETFs Despite $1.2B Outflow?

US Bitcoin exchange-traded funds (ETFs) have experienced their longest period of daily net outflows since their introduction at the beginning of the year. Data compiled through September 6, 2024, reveals that investors withdrew nearly $1.2 billion from these ETFs over an eight-day period. 

However, Bloomberg analyst Eric Balchunas has maintained a positive outlook on spot Bitcoin ETFs despite the outflows. Balchunas argues that the outflows, while large, represent a small fraction of the total assets under management (AUM) and are not as concerning as they might appear.

Bloomberg Analyst Eric Balchunas Bullish on Spot Bitcoin ETFs

In a recent thread on X, Bloomberg analyst Eric Balchunas highlighted his continued optimism towards spot Bitcoin ETFs despite recent outflows. Balchunas noted that the $1.2 billion withdrawn from the ETFs is relatively minor when compared to the total AUM of these funds. He emphasized that such outflows are a normal part of the investment cycle and that significant inflows into Bitcoin ETFs earlier in the year have set a high bar. 

According to Balchunas, the $287 million outflow reported recently constitutes only 0.5% of the total AUM, which he considers a manageable amount.

Balchunas also addressed the concern that the outflows might indicate a broader issue with the Bitcoin ETFs market. He argued that fluctuations in asset prices are not uncommon and that the current outflows should be viewed in the context of the overall trend. 

He pointed out that despite the recent downturn, Bitcoin ETFs have seen substantial net flows year-to-date, reaching $16.8 billion. This figure is close to the high end of his earlier predictions and reflects ongoing investor confidence in the cryptocurrency ETFs.

Market Conditions and Outflows

The recent outflows from US Bitcoin ETFs come amid a broader retreat from riskier assets in global markets. Economic uncertainty, including mixed US jobs data and deflationary pressures in China, has contributed to volatility in both the cryptocurrency and traditional financial markets. Concurrently, CoinGape reported BTC price crash and $300 million in liquidations after Friday’s weak Jobs data. 

Despite Eric Balchunas positivity, weekly CoinShares data also reveal outflows from digital asset investment products, totaling $726 million. This matches the largest outflow recorded in March of this year. 

More so, the US experienced the bulk of these outflows, amounting to $721 million, driven by uncertainty surrounding potential interest rate cuts by the Federal Reserve. The market’s mixed reaction to macroeconomic data and anticipation of the upcoming Consumer Price Index report contributed to this volatility.

In contrast, Europe displayed more resilience, with Germany and Switzerland showing modest inflows of $16.3 million and $3.2 million, respectively. Among individual assets, Bitcoin saw the largest outflows at $643 million, while Solana attracted $6.2 million in inflows, indicating a shift in investor preference.

At the time of writing, Bitcoin price is $54,959.48, showing a 1.57% increase in the last 24 hours. The market cap has reached $1.09 trillion, maintaining Bitcoin’s top position in market rankings

However, this BTC price recovery has come with bull trap concerns due to a potential U.S. recession. Despite the uptick, several troubling economic indicators are casting doubt on the rally’s sustainability