Ex-Swiss bank director discusses the future of Bitcoin ETFs after record-breaking trading day

Bitcoin ETFs shattered records with a 14,261 bitcoin purchase on March 12, as a former Swiss Bank Director shed light on the changing Bitcoin ETF investment scene.

On March 12, net spot Bitcoin ETF inflows surpassed $1 billion, with Blackrock’s IBIT product reaching a record $849 million inflow and exceeding 200,000 BTC in assets under management, as per reports.

The latest surge in trading activity eclipses the initial enthusiasm seen at the ETFs’ inception and establishes a new market engagement benchmark.

In a March 14 interview with Crypto.news, Clive Thompson, a retired managing director of wealth management with decades of experience in Swiss private banking, shared his insights into the cryptocurrency market following the historic launch of Bitcoin Exchange Traded Funds (ETFs) on Jan. 11, 2024. The introduction of these ETFs, including the high-profile conversion of Grayscale’s Bitcoin Trust into an ETF, marks a significant milestone in the evolution of Bitcoin as an asset class.

“Bitcoin became an asset class which can no longer be ignored,” Thompson stated, highlighting the watershed moment when the U.S. Securities and Exchange Commission (SEC) allowed the launch of 10 Bitcoin ETFs. This move, he notes, is not an endorsement of Bitcoin as an investment but acknowledges the undeniable demand for accessible exposure to Bitcoin’s price.

The ETF launch was historic, drawing over $700 million on its first day, the highest ever for an ETF. Although Grayscale saw some early losses due to higher fees, the situation improved fast, leading to more than $11 billion invested in Bitcoin through these ETFs since they started.

What makes this development even more significant is the growing acceptance of Bitcoin ETFs among investment firms worldwide. “Investment firms all around the world are under pressure from their relationship managers to include the Bitcoin ETFs as an authorized investment,” Thompson explained. He delved into the rigorous approval process within these firms, emphasizing that despite the challenges, “little by little, these ETFs are going to be approved.”

However, Thompson also cautioned that the journey toward widespread adoption is not without its hurdles. He discussed the cautious approach many asset allocators are likely to take, initially limiting exposure to a small percentage. Moreover, not all relationship managers are convinced about including Bitcoin in client portfolios immediately, waiting for a pullback before making a move.

Despite these challenges, Thompson remains optimistic about the future flow of funds into Bitcoin ETFs, driven by a combination of increasing acceptance among investment firms and the potent allure of Bitcoin’s rising price, which has created a “fear of missing out” among investors. Since the ETF launch, Bitcoin’s price surged from $47,000 to a staggering $72,800, further fueling investment interest.

Looking ahead, Thompson predicts continued growth but also cautions investors about the potential for volatility, driven by profit-taking and external risks such as government actions or market incidents. Yet, he believes in the resilience of Bitcoin, buoyed by factors like the network effect and concerns over fiat currency devaluation.

On March 11, just a day before the record ETF purchases, the new Bitcoin ETFs acquired approximately 7200 Bitcoins. This acquisition significantly exceeded the average daily mined supply of 900 Bitcoins, contributing to a 5% price increase in Bitcoin. Thompson’s observations underscore the profound impact of ETF activities on the market.

Furthermore, Thompson highlighted Genesis Holdings’ role following its bankruptcy and subsequent liquidation of GBTC shares, starting on Feb. 28 and concluding around March 13. The liquidation indirectly influenced Bitcoin sales, and according to Thompson, the conclusion of Genesis’s GBTC share sales marked a pivotal moment with potential implications for Bitcoin’s price trajectory, hinting at a surge to new highs, which could attract more inflows into Bitcoin ETFs.

“In the long term, I see much higher prices,” Thompson concluded, reflecting on the growing network of Bitcoin holders and the inflation of fiat currencies. “The hard-wired limit of 21 million bitcoins means that it can’t be printed will-nilly like fiat currency can, making it a protection against what may happen to the currency.”