Bitcoin ETF: Massive exodus of European capital towards US funds

While the United States has just authorized the launch of the first ETFs backed by Bitcoin, Europe is witnessing a real exodus of capital from its own crypto funds towards these new products made in the USA.

An exodus that benefits American funds

According to Luke Nolan, research associate at CoinShares, capital outflows from European Bitcoin ETPs (exchange traded products) have literally exploded since the arrival of US Bitcoin spot ETFs. This leak clearly reflects a massive movement of reallocation by American institutional investors, who are abandoning European investment vehicles to rush towards brand new American funds.

Indeed, previously, many American investors used European ETPs to carry out low-risk arbitrages. But with the new national ETFs, they now prefer to operate these transactions via local products, which are more profitable and convenient.

Before the arrival of US Bitcoin spot ETFs, many US institutions used European ETPs to conduct risk-free trading. With the new ETFs made in the USA, these same players find it more profitable to make these transactions on the national market.L “, analysis Luke Nolan.

Concretely, these arbitrages consist of investors short-selling Bitcoin futures contracts, while simultaneously purchasing the underlying asset via ETPs. A position which guarantees them to be able to close the futures contract with less risk, while pocketing the price differential between the spot and the futures.

Except that they have been optimizing these arbitrages since the arrival of spot Bitcoin ETFs made in the USA, which are much more competitive.

Approval of US Bitcoin ETFs sounds like a bolt from the blue

And the figures confirm this massive reallocation. According to BitMEX Research, the four largest European Bitcoin ETPs have suffered massive capital outflows since the launch of Bitcoin ETFs in the United States. Same observation on the Canadian side.

European bitcoin ETP outflows increased this week.
European bitcoin ETP outflows increased this week. Source: BitMEX Research

American investors who had invested in Canadian ETPs are also transferring their funds to funds made in the USA, which are more advantageous.x,” confirms Luke Nolan.

Certainly, the share of cryptos in the allocations of institutional investors still remains low. However, the arrival with fanfare of the first American Bitcoin spot ETFs could significantly accelerate the trend. Especially since other products (Ethereum ETF or XRP) are in the SEC’s boxes, ready to do battle.

The authorization of Bitcoin spot funds in the United States marks a decisive turning point. By finally allowing American institutional investors to access Bitcoin via national vehicles, it is causing an unprecedented influx. To the point of siphoning off assets from European and Canadian ETPs!

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