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Bitcoin Flows to Wall Street as Retail Speculation Dries Up in Post-Selloff Slump
- Bitcoin was designed to escape traditional finance, but major asset managers like BlackRock are now facilitating large-scale conversions of Bitcoin holdings into ETFs, with over US$3 billion in conversions already processed.
- Retail investors remain cautious due to Bitcoin’s high price tag and perception of missing the entry point, while institutional adoption through ETFs continues to accelerate.
- The recent Bitcoin price decline appears driven by retail traders repositioning rather than institutional exit, yet US spot Bitcoin ETFs are experiencing significant net outflows exceeding US$1 billion over four days.
- Altcoins have underperformed considerably with the Altcoin Season Index at its lowest since August, suggesting the market remains firmly in a Bitcoin-dominated cycle rather than experiencing broader crypto season.
Bitcoin started as a pushback against banks and traditional finance, but it’s now finding its way into the very system it was meant to avoid. According to a recent Bloomberg report, it seems that BTC is now being absorbed by these very TradFi players in ways never seen before.
Following the nod of approval for in-kind transactions, where Bitcoin can be held in exchange-traded funds (ETFs), asset managers report increasing interest from large BTC holders who simply want to keep their Bitcoin in an ETF.
BlackRock’s head of digital assets, Robbie Mitchnick, said the firm has so far handled over US$3 billion (AU$4.6 billion) of such conversions. He added that HODLers are increasingly looking for “the convenience of being able to hold their exposure within their existing financial adviser or private-bank relationship.”
According to the Bloomberg report, Galaxy is also handling a limited number of conversions, while Bitwise receives daily enquiries.
This comes as retail interest remains low and many feel they’ve missed their entry into Bitcoin. A price tag of US$100k-plus is seen by many as too expensive – even though one can buy a fraction of a BTC.
The price of Bitcoin has been struggling for the last couple of weeks. At the time of writing, BTC had dropped 1.4% on the daily chart to just US$109,302 (AU$168,314). Analysts say the sell-off comes from long-term retail holders selling, rather than institutions exiting.
Despite this, the US spot Bitcoin ETFs continue to lose steam, with the last four trading days seeing net outflows of over US$1 billion (AU$1.5 billion).
Related: Strategy Boosts Bitcoin Holdings with $18.8M Purchase, Extends Lead as Top Corporate Holder
Altseason Seems Far Off as Analysts Watch for Recovery Signs
And it’s not only Bitcoin investors who’ve been cautious. Altcoins too have lost ground, with investors on the sidelines.
The CoinMarketCap Altcoin Season Index is at its lowest since August – strongly suggesting we’re stuck in a full-on Bitcoin season.
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Brett Munster, a portfolio manager at Blockforce Capital, told Bloomberg that the recent sell-off “was not a reflection of crypto’s intrinsic value, but a rapid repositioning by short-term traders bracing for broader macro volatility.”
Investors are closely watching Friday’s US inflation numbers and the upcoming meeting between US President Donald Trump and his Chinese counterpart, Xi Jinping at the APEC summit in South Korea – though Trump has hinted the meeting might not happen.
Analysts at Bitfinex highlighted the ongoing volatility in their latest report, stating:
With volatility compressed and positioning reset following the liquidation cascade, the next two weeks are likely to determine whether the market can transition from stabilisation to sustained recovery.
Bitfinex Related: Wise Eyes Stablecoins: Fintech Giant Seeks Digital-Asset Lead in London
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
