There’s no arguing with the data. Bitcoin and the related ETFs providing spot exposure to the largest cryptocurrency are saddled with year-to-date losses, extending bearishness that started last year.
Said another way, it’s difficult for investors to be positive about bitcoin, other digital currencies, and ETFs such as the CoinShares Bitcoin ETF (BRRR). But there’s another side to the story, and it goes beyond recent upside. Some experts believe there are structural forces at play that could be catalysts for a bitcoin rally in the coming year. In fact, they’re willing to wager on a substantial surge.
In a recent report, deVere Group CEO Nigel Green noted that despite bitcoin’s lingering weakness, the foundation on which the king of cryptocurrencies resides is the strongest it’s ever been. He pointed to infrastructure as one example.
“In previous downturns, infrastructure failed alongside valuations. Major intermediaries collapsed and confidence evaporated. This time, regulated products are functioning, custodians remain operational, and institutional access continues to expand,” observed Green.
Reasons to Be Bullish on BRRR
ETFs such as BRRR serve important functions in the bitcoin marketplace. This includes bringing more registered investment advisors (RIAs) and retail investors into the arena. Green also cautioned about not getting too caught up in bitcoin ETF flows data.
“The focus on short-term ETF outflows ignores the broader picture,” he noted. “The institutional allocation base that entered the market over the last two years has not disappeared.”
Market participants consider other notable findings specific to bitcoin funds such as BRRR. For instance, the data indicating that many long-term HODlers haven’t pared or liquidated positions, even in the face of bitcoin’s slump. They’re still holding and that could be a constructive sign because it keeps supply tight. The importance of that, Green explained, is that if a rebound materializes, it could be powered higher by constricted supply meeting resurgent demand.
Green acknowledged that while fear in the bitcoin market is currently elevated, today’s state of affairs has its own context. It isn’t even comparable to the crypto winter of 2022,when FTX collapsed. In other words, the negative views may be blown out of proportion and there is actually good news for investors mulling bitcoin and BRRR. History has already indicated that bitcoin positivity can be restored in short order.
“Confidence can rebuild rapidly in markets where supply is constrained and institutional participation is embedded,” concluded Green.
For more news, information, and strategy, visit the CoinShares Content Hub.
