In recent weeks, a noticeable change has been observed in the preferences of European Bitcoin (BTC) investors, who are redirecting their investment strategies towards the recently approved Bitcoin ETFs in the United States.
According to a recent interview on TheBlock with CoinShares research associate Luke Nolan, outflows from Bitcoin exchange-traded products (ETPs) in Europe have seen a significant increase since the launch of ETFs in the United States.
Prior to the approval of several ETFs in the United States, European ETPs were widely used by American institutions for almost risk-free trading.
However, with the recent approval of these new products in the United States, it appears that these institutions find it more profitable and convenient to run the same operations nationally.
Luke Nolan highlights that this transition is due to the approval of the so-called “spot Bitcoin ETFs” in the United States.
These ETFs allow US investors to trade more efficiently and profitably compared to European ETPs.
Prior to this approval, American investors were conducting operations known as “basis trades,” shorting BTC futures while purchasing the underlying asset through European ETPs.
With Bitcoin ETFs in the United States, these operations are more direct and efficient
Data from BitMEX Research reveals that the four largest BTC ETPs in Europe have experienced considerable outflows since the launch of Bitcoin ETFs in the United States.
This trend is also seen in the Canadian market, where US investors who previously invested in Canadian ETPs are transitioning to the new US funds.
This change in institutional investor preferences could have significant implications for the European cryptocurrency market.
As institutional investors migrate towards the newly approved Bitcoin ETFs in the United States, concerns are emerging that this shift is not only driven by confidence in regulation and operational efficiency, but may also have consequences in terms of capital centralization.
Convenience in executing trades and cost efficiency, although prominent factors, raise questions about market diversity and whether this movement is contributing to the concentration of resources in the hands of a few considering the future scarcity of the BTC asset.
The Bitcoin market is experiencing a geographic shift in institutional investor preferences, with a clear migration from European ETPs to the recently approved Bitcoin ETFs in the United States.
This phenomenon highlights the market turns based on legal resolutions, operational efficiency and comfort in the execution of operations of institutional investors in the cryptocurrency ecosystem.