Majority of Bitcoin ETF Inflows Retail Driven, Reveals VanEck CEO

Bitcoin exchange-traded funds (ETFs) have been attracting a significant amount of capital in 2024, mostly driven by retail investors rather than traditional banks and institutional investors. Jan van Eck, the CEO of VanEck, stated in an interview with at Paris Blockchain Week that the success of Bitcoin ETFs exceeded his expectations, with billions of dollars of inflows on some days. Van Eck believes that traditional investors have not yet entered the market, and estimates that 90% of the flows are still from retail investors. He mentioned that no U.S. banks have officially approved or allowed their financial advisers to recommend Bitcoin to their clients.

Van Eck expects that major institutional investments from banks and traditional firms will enter the Bitcoin ETF market in the coming months. He also stated that the Bitcoin ETF landscape is still in its early stages and maturation will take time. When asked why investors would prefer Bitcoin ETFs over directly buying and managing Bitcoin themselves, van Eck highlighted convenience, safety, and affordability as key factors. He explained that the ETFs have single-digit spreads and no or low fees, making it easier for investors to make purchases.

Jan van Eck comes from a family with a background in investment management. His father, John van Eck, founded VanEck in 1955 and started the first gold fund in the United States in 1968. According to van Eck, the fund performed well during the inflation of the 1970s. He stated that his firm recognizes the importance of staying alert to emerging assets that can complement or contend with gold. In 2017, they recognized Bitcoin as a potential asset to complement gold in people’s portfolios.

Van Eck views Bitcoin as a store of value and believes it could be a better store of value than gold in contemporary times. He also noted the U.S.’s budget deficit problems and the anticipation of market movements reflecting this reality. He pointed out that the impact of Bitcoin ETFs on the overall Bitcoin market should not be overstated. The global Bitcoin market is influenced by various factors, and he highlighted the influence of Asian markets by referencing a sharp price rise in April that occurred outside of U.S. trading hours.

While Bitcoin ETFs have attracted significant capital, the majority of the inflows are from retail investors rather than traditional banks and institutional investors. Van Eck expects institutional investments to enter the market in the future, but believes that the Bitcoin ETF landscape still has a long way to go in terms of maturation. Convenience, safety, and affordability are key reasons why investors choose Bitcoin ETFs over directly buying and managing Bitcoin. Van Eck’s firm recognizes Bitcoin as a potential asset that can complement gold in people’s portfolios, viewing it as a store of value. The impact of Bitcoin ETFs on the overall Bitcoin market should not be overstated, as the market is influenced by various factors globally.