In June, the cryptocurrency market was swept by winds of volatility, which caused bitcoin price is falling by $10,000. News of the massive Mt. Gox payoff, miner sell-offs, and government-related liquidations contributed to the price decline.
However, amidst the cynical mood, a surprising trend has emerged: spot investors Bitcoin ETFs have held their ground. This unexpected resilience has analysts questioning their initial assumptions about both Bitcoin’s price trajectory and the risk tolerance of a fresh generation of investors – the baby boomers.
Bitcoin price down in June. Source: Coingecko
ETFs show a steady hand
Traditionally seen as a haven of stability, ETFs have become a gateway for mainstream investors looking to enter the volatile world of cryptocurrencies. Spot Bitcoin ETFs, which directly track the price of Bitcoin, launched in the US earlier this year to initial enthusiasm.
However, concerns arose when the price of Bitcoin began to fall in June. Analysts predicted a wave of panic selling, especially among millennials, as investors fled the sinking ship. But to everyone’s surprise, spot Bitcoin ETFs defied expectations.
I was surprised when I checked the bitcoin ETFs and saw that they actually had positive net flows for 1D, 1W and 1M. I expected worse considering that the price of btc dropped by $10k. During this period, the YTD net flow remained steady at +14.6bn. A good sign that this number remained high during the “step back” phase. photo:twitter.com/0YnRbD9W8g
— Eric Balchunas (@EricBalchunas) July 2, 2024
“I expected worse, given the price decline,” Bloomberg ETF analyst Eric Balchunas admitted in a recent interview. The data showed that despite the price decline, the spot Bitcoin ETF continued to see positive inflows throughout June.
Even more remarkably, annual net flows for these ETFs have held steady at nearly $15 billion. This suggests a fresh maturity in the Bitcoin market, with investors becoming increasingly comfortable waiting out price volatility and taking a long-term view.
As of today, the market cap of cryptocurrencies stood at $2.2 trillion. Chart: TradingView.com
Boomers are embracing cryptocurrencies
Another unexpected twist in this story is the behavior of a demographic group that has long been considered risk averse – baby boom. Traditionally, this generation has been wary of fresh asset classes, preferring the stability of stocks and bonds.
Nevertheless, the positive flow into the Bitcoin ETF indicates a potential shift in their investment strategy. Balchunas believes that these fresh entrants into the crypto space are proving to be surprisingly resilient HODLers (a crypto term for holding assets for the long term).
Unlike some investors who may be swayed by short-term price swings, boomers seem to be focused on Bitcoin’s long-term potential, Balchunas explained. This could be due to a combination of factors, including the cryptocurrency’s growing institutional adoption, which lends it credibility, and the potential for high returns, even given the recent price correction.
The recent resistance of the spot Bitcoin ETF paints an positive picture for the future of the cryptocurrency market. It suggests that investors are becoming more comfortable with Bitcoin’s inherent volatility and are taking a long-term view.
Featured image from Unsplash, chart from TradingView
