Bitwise Invest CIO offers clarifications on Bitcoin ETF outflows - CryptoCrazeNews

Bitwise Invest CIO offers clarifications on Bitcoin ETF outflows

Bitwise Invest CIO offers clarifications on Bitcoin ETF outflows

The spot Bitcoin Exchange-Traded Fund (ETF) is buzzing with high hitting trading volumes and anticipation to drive the crypto market to its ultimate glory run. As the bullish sentiments are taking over that market, Bitwise Invest CIO highlighted some of the important nuances missed by Bianco’s ETF analysis. This comes in when Bitcoin recently crossed the $1 trillion market cap mark after gaining exposure through ETFs in the US.

Bitwise CIO simplifies ETF outflows

Matt Hougan, CIO at Bitwise Invest in post wrote that Bitcoin ETFs will of course someday have outflows as every ETF does. He pointed out the misses in Jim Bianco’s research.

Bitwise Invest’s CIO stated that they already have this trader/investor dynamic in bitcoin ETFs. He added that just to explain it, there is a reason Vanguard S&P 500 ETF (VOO) and  SPY, SPDR S&P 500 ETF see variable flows, beyond brand. 

Jim Bianco Macro investment research at Bianco Research in a post wrote that VOO and SPY are two identical ETFs in every way. He added that Vanguard S&P 500 ETF holds $406 Billion in Assets, while SPDR S&P 500 ETF. $488 Billion in assets.

He mentioned that these two ETFs are not identical in every way. They are different funds. It is important to note that SPY’s expense ratio is 3 times that of VOO (0.09% vs. 0.03%). However, SPY is a unit investment trust that cannot re-invest its dividends. It creates a cash drag that causes it to underperform in rising markets. 

What are investors doing?

Hougan added that investors in the market are really smart about their choices. He differentiated both the ETFs by considering VOO as for long-term investors, while, SPY is enormously liquid and so attracts traders.

According to Bitwise Invest CIO. One ETF is huge and liquid but has a high expense ratio. On the other hand, other ETFs are 80% cheaper and have been seeing strong inflows. It seems that the most likely result is we see long-term investors concentrate on the lower cost ETFs.

Hougan suggested that ETF redemptions aren’t exactly indiscriminate sell orders. Most importantly, many ETFs trade over the counter (OTC). This means that they trade with large institutional market makers.

He added that ETFs have to sell during redemptions and market makers take the other side of the trade. According to Bitwise Invest CIO, biggies will hedge their positions using futures or other tools and work the trade over some time. This is why it is important to consider the liquidity of the entire complex surrounding the asset.

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