How Bitcoin ETFs Are Changing Institutions' Appetite for Crypto

Bloomberg ETF analyst Eric Balchunas on Tuesday argued that spot Bitcoin (CRYPTO: BTC) ETFs have solved one of the asset’s biggest adoption problems by increasingly embedding the asset in traditional investment portfolios.

Why ETF Inflows Matter

BlackRock (NYSE:BLK) continues to dominate Bitcoin ETF inflows, with total assets across the products nearing $100 billion in August.

Balchunas said Tuesday that BlackRock’s iShares Bitcoin Trust (NASDAQ:IBIT) remains the category’s standout product, but noted that inflows are increasingly broad-based across multiple issuers.

"When you see all of them taking money, then you know people are into Bitcoin," he told Scott Melker in an interview.

Balchunas estimates only a small portion of IBIT flows, potentially around 2% to 3%, comes from investors converting Bitcoin held directly into ETF shares.

Balchunas also highlighted that IBIT has slightly outperformed Vanguard’s S&P 500 ETF since its launch despite Bitcoin prices suffering a roughly 50% drawdown along the way.

BTC Has Now a Durable Bid

Balchunas said ETFs have effectively fixed Bitcoin’s intermediary problem as they grant access to investors through the same infrastructure they already use for stocks and bonds. That could make flows stickier.