Current:Home > ScamsBitcoin ETF trading volume tripled in March. Will that trend continue in April? -NextFrontier Finance
Bitcoin ETF trading volume tripled in March. Will that trend continue in April?
View
Date:2025-04-14 13:40:15
By just about any important metric, the new spot Bitcoin (CRYPTO: BTC) exchange-traded funds (ETFs) have been a resounding success. As a group, they have now attracted more than $30 billion in assets under management. In March, these spot Bitcoin ETFs set a record with more than $111 billion in overall trading volume, nearly tripling the volume from the previous month.
But how much longer can this record-setting pace continue? After all, the new Bitcoin ETFs are starting to see net outflows on some days and the price of Bitcoin seems to be stuck right around the $70,000 level. If you are thinking about investing in the new ETFs as a way of getting exposure to Bitcoin, there are three key factors to consider.
The Bitcoin halving
First and foremost, there is the Bitcoin halving, which is set to take place on April 19. In a halving event, the mining reward paid out to Bitcoin miners gets slashed by half. This slows the growth in the supply of new bitcoins while making Bitcoin even more of an inflation-resistant asset.
Halvings have historically driven huge price increases for Bitcoin. In the last halving cycle, which started in May 2020, the price of Bitcoin skyrocketed from $10,000 to an all-time high of almost $69,000 in November 2021. While past performance is certainly no guarantee of future results, this same pattern has occurred in two other halvings (in 2012 and 2016), so many Bitcoin investors are confident there will be a similar pattern this year.
If that's the case, then that's extremely good news for the new Bitcoin ETFs. A higher Bitcoin price attracts the attention of investors, who then decide to invest more money into Bitcoin, which sends the price higher, which then encourages even more investors to put their money into Bitcoin, and the cycle repeats. Past Bitcoin halving cycles have lasted anywhere from 12 to 18 months, so it's not out of the realm of possibility that the remainder of 2024 will see higher Bitcoin ETF inflows and trading volumes.
Bitcoin vs. gold
Many crypto investors refer to Bitcoin as "digital gold" and view it as being similar to physical gold in terms of the role that it can play in their portfolios. They prize Bitcoin not just for its upside potential, but also for its potential ability to maintain its value during times of economic upheaval. Bitcoin has historically accounted for 20% to 30% of the "store of value" market, and some analysts think this number could eventually climb to 50%.
That's why the current economic situation is so fascinating. At the same time that Bitcoin is racing to all-time highs, so is gold. The price of gold is currently close to $2,370, but there are some who say that it could run as high as $3,000. Central banks appear to be buying gold hand over fist as a hedge against economic turmoil.
So, the big question becomes: If events in the Middle East take a turn for the worse, or if the U.S. economy falters, where do investors put their money? Crypto enthusiasts, no doubt, will move their money into Bitcoin. But what about everyone else? Gold has historically been the go-to option for institutional investors and hedge funds, and that might be the case again. If so, then the flow of money into Bitcoin (and the new Bitcoin ETFs) might slow, and that will definitely lead to lower ETF trading volumes.
Bitcoin allocations
Another important factor to keep in mind is the size of the Bitcoin allocation recommended for investors. Until this year, that percentage was typically 1% (or lower). However, some institutional investors — including Fidelity Investments — now appear to be boosting their suggested Bitcoin allocations for investors closer to the 3% mark.
As long as this percentage stays the same or continues to rise, that should be good news for Bitcoin and the new Bitcoin ETFs. It means that both retail and institutional investors will continue to pour new money into Bitcoin until they've reached the suggested allocation level. And it means that Bitcoin is closer than ever to going mainstream. It won't just be crypto enthusiasts holding Bitcoin — it will also be your next-door neighbor.
As for me, I remain bullish on Bitcoin. Whether you choose to buy it in the crypto market, or prefer to get access to it via a spot Bitcoin ETF, it continues to be a fantastic long-term investment.
Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
Should you invest $1,000 in Bitcoin right now?
Offer from the Motley Fool: Before you buy stock in Bitcoin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
See the 10 stocks
*Stock Advisor returns as of April 8, 2024
veryGood! (51)
Related
- Man charged with murder in death of beloved Detroit-area neurosurgeon
- Powerball winning numbers for May 18 drawing: Jackpot rises to $88 million
- How the Dow Jones all-time high compares to stock market leaps throughout history
- Murders of 2 girls and 2 young women in Canada in the 1970s linked to American serial rapist
- From family road trips to travel woes: Americans are navigating skyrocketing holiday costs
- CNN Commentator Alice Stewart Dead at 58
- Ship that caused deadly Baltimore bridge collapse to be refloated and moved
- Rough return to ‘normal’ sends Scheffler down the leaderboard at PGA Championship
- Man can't find second winning lottery ticket, sues over $394 million jackpot, lawsuit says
- TikTok ban: Justice Department, ByteDance ask appeals court to fast-track decision
Ranking
- Taylor Swift Cancels Austria Concerts After Confirmation of Planned Terrorist Attack
- Climate activists glue themselves at Germany airport to protest pollution caused by flying
- Jessica Biel Chops Off Her Hair to Debut 7th Heaven-Style Transformation
- Arizona man sentenced to natural life in prison for the 2017 death of his wife, who was buried alive
- Why we love Bear Pond Books, a ski town bookstore with a French bulldog 'Staff Pup'
- Designer David Rockwell on celebrating a sense of ritual
- Oleksandr Usyk beats Tyson Fury by split decision to become the undisputed heavyweight champion
- Disturbing video appears to show Sean Diddy Combs assaulting singer Cassie Ventura
Recommendation
Cincinnati Bengals quarterback Joe Burrow owns a $3 million Batmobile Tumbler
Diddy admits beating ex-girlfriend Cassie, says he’s sorry, calls his actions ‘inexcusable’
Kansas City Chiefs CEO's Wife and Daughter Speak Out Amid Harrison Butker Controversy
As new homes get smaller, you can buy tiny homes online. See how much they cost
Meta releases AI model to enhance Metaverse experience
Duke graduates who walked out on Jerry Seinfeld's commencement speech failed Life 101
Indiana Pacers dominate New York Knicks in Game 7 to advance to Eastern conference final
Harrison Butker decries diversity, but he can thank Black QB Patrick Mahomes for his fame