Bitcoin ETFs Continue To See Material Inflows

The Pomp Letter (private feed for [e-mail])

To investors,

Bitcoin has been lulling the market to sleep in recent weeks. However, as the digital currency continues to trade sideways, the ETFs are quietly accumulating more assets.

Bloomberg’s Eric Balchunas pointed out this morning:

“The bitcoin ETFs on a 15-day inflow streak, pulled in $2.4b in the past month (only two ETFs have taken in more $SPY & $VOO). YTD net +$14b. The ability to bounce back w/ renewed interest after a couple nasty selloffs is rare for hot sauce type strategies. Shows staying power.”

It is hard to decipher a difference between retail and institutional flows in these ETFs, but capital is flowing regardless of who is putting money to work. This capital doesn’t care about the price of the asset. It continues to flow in an attempt to gain price exposure to one of the best performing assets in history.

Last week I attended the Consensus Conference in Austin, Texas. One of the big takeaways was how certain the institutional world has become when thinking about bitcoin.

This certainty has nuance to it. Institutions have not reached consensus on what bitcoin will become — there is wide disagreement on how to value bitcoin, along with various price targets that people have thrown out to the public.

Instead, institutions are building certainty around bitcoin’s survival. They have developed confidence in the downside protection of allocating to bitcoin. This confidence changes market behavior.

Long-term thinking is derived from confidence and conviction. Without those, insecurity drives impatience.

Bitcoin is antithetical to impatience. You can see this quantitatively in the fact that majority of the bitcoin in circulation has not moved in over two years. It didn’t matter that the price dropped 80% or that the asset rebounded back to all-time highs.

Most bitcoin holders aren’t selling.

Combine this newfound certainty and conviction from institutions with their existing trend of passive investing and you can see how persistent capital in-flows are likely the name of the game for years to come.

At the same time that the existing institutional leadership is building their certainty and conviction, there is a rising demographic of young people in these institutions who are poised to take up the cause as they ascend into leadership positions.

An interesting way to think about this is how Bitcoin Magazine’s David Bailey explains it:

“The Bitcoin nation is stronger than anyone realizes. We share a common ideology, economic incentives, and vision (more or less). We wear no uniform. We've infiltrated every institution, every country, every social network. Aristocrats + working class alike. We can not be stopped.”

That view of the current bitcoin holder base almost sounds too good to be true. But I am constantly surprised at how many people I meet who hold bitcoin and don’t work in the industry.

This weekend I was at a dance recital for my daughter and a guy came up to me. He works at Apollo, but is a big bitcoin believer. Last week at the conference I met people from almost every continent, and from many different industries, who were all interested in seeing the Bitcoin vision come to fruition.

Some of the individuals will eventually sit in positions of influence and power. They will run the large financial firms. They will become our political leaders. They will create the next generation of world-changing companies.

A true decentralized network of people all working towards a common cause. This is what capitalism looks like. This is how economic incentives work. What a beautiful thing to see.

And this is why the ETFs will continue to see persistent in-flows over the long-term.

Bitcoin is an idea whose time has come. Have a great day. I’ll talk to everyone tomorrow.

-Anthony Pompliano

Peter McCormack is the Chairman of Real Bedford, and the host of “What Bitcoin Did” podcast.

In this conversation, we talk Peter buying Real Bedford men’s team and plugging it into the bitcoin network, his plan to make the Premier League, raising capital, sponsors, merchandise, treasury management, bitcoin market cycles, women’s team, opening a bar, building a stadium, investing in the community of Bedford, and potential risks.

Listen on iTunes: Click here

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Peter McCormack’s Football Plans & How Bitcoin Saved Them

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