Bitcoin (BTC) exchange-traded funds (ETFs) have attracted significant amounts of capital in 2024, but traditional banks and institutional investment have yet to enter the fray.
Speaking exclusively to Cointelegraph at Paris Blockchain Week, VanEck CEO Jan van Eck said the retail sector has primarily been responsible for inflows into spot Bitcoin ETFs in the United States.
Van Eck said that the initial success of the ETFs, which have on some days seen billions of dollars of inflows since their launch, surpassed his expectations. However, he believes these inflows have not been influenced by significant investments from traditional finance (TradFi) players.
“I was surprised, but I don’t think it’s traditional investors yet. I still think 90% of the flows are retail. You’ve had some Bitcoin whales and some other institutions move some assets in, but they were already exposed to Bitcoin,” van Eck said.
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The CEO of the investment management firm added that no U.S. banks have officially approved or allowed their financial advisers to recommend Bitcoin to date.
Van Eck said that the next month could see the arrival of some major institutional investments from banks and traditional firms but that the Bitcoin ETF landscape was still in its infancy:
“There’s a lot of maturation to happen. A lot of technology will be developed on-chain, so there’s a long way to go.”
Cointelegraph also asked why investors would prefer to invest in a Bitcoin ETF over directly buying and managing BTC themselves. Van Eck said convenience was a major reason, as investors look to fund managers to handle their entire portfolios.
“Convenience, safety, and affordability. You had 2% spreads on many centralized exchange platforms like Coinbase. We have single-digit spreads for the ETFs and no fees or low fees. It's easier just to do a buy ticket than anything else,” Van Eck said.
Following in his father’s footsteps
VanEck was founded in 1955 by John van Eck, who would make his name by starting the first gold fund in the United States in 1968 when gold was fixed against the dollar. Jan van Eck said his father’s fund boomed as inflation soared in the 1970s.
Van Eck said that his tendency to be a “paranoid business person” has kept him alert to any emerging assets that could contend with gold:
“In 2017, we said Bitcoin will not replace gold, but it will significantly complement it in people's portfolios.”
Van Eck said his firm’s “big picture” approach to investing is driven by the understanding that political, economic and technological trends will drive financial markets. Up until the 2010s, there had not been an emerging asset until Bitcoin rose to prominence.
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“I started looking at Bitcoin. I’m not like super in love with it or anything. I just think that at times you really want to have a store of value in your portfolio. And that’s what I care about, people’s investment savings,” Van Eck explained.
The CEO added that there’s an argument for Bitcoin being a better store of value than gold in contemporary times. He also said that the U.S. has “big budget deficit problems” that it must tackle in the coming year and that market movements are reflecting anticipation of this reality.
While much has been made of the impact of Bitcoin ETFs and the price appreciation of the preeminent cryptocurrency in 2024, Van Eck said their impact might be overstated:
“What I’d like to point out is that it's not the most earth-shattering thing. The Bitcoin market is more global and much deeper than just being influenced by the ETFs.”
Van Eck pointed to a sharp rise in price in early April that did not occur during U.S. trading hours, which is indicative of the influence of Asian markets.
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