”Spot ETFs are a notable theme as we approach their second year of trading. Spot Bitcoin ETFs began trading in the U.S. on January 11, 2024; their Ethereum counterparts began trading on July 23, 2024. Through December 19, BTC funds had seen ~$36.4 billion of net inflows; overall net inflows for ETH ETF funds had totaled $2.4 billion for the same period. We think flows will remain the most significant driver of BTC returns. Flows have explained ~46% of the variance in BTC price action, with the beta showing that $1 billion of inflows has led to ~4.7% returns. Since January, equities have now explained 15% of price volatility, with BTC’s beta sitting between 1.4 and 1.5. For ETH, the flow-return relationship has mainly been driven by a couple of outliers; ETH has been much more correlated with the S&P 500 since its ETFs started trading in July. Overall, we continue to expect fund flows to be BTC returns’ strongest driver in the near term, but don’t expect this to be true for ETH unless fund flows pick up dramatically.”
Morten W. Langer
