Bitcoin Sees Tug-of-War as ETF Flows Slow

Bitcoin (BTC) bulls and bears struggle for dominance early Thursday, with a rally attempt rejected at $64,000 and a subsequent bear attempt to break below $62,745 met with resistance. Choppy price action coincides with a slowdown in U.S.-listed BTC ETF inflows, though buying activity may increase with Morgan Stanley considering allowing brokers to recommend ETFs to clients. Despite the price swings, Fidelity Digital Assets remains bullish long-term, noting a 20% increase in wallets holding $1,000 or more BTC since early 2024.

Bitcoin's Price Action in Flux as Bulls and Bears Contest Control

The ongoing battle between Bitcoin bulls and bears continued on Thursday, with each camp vying for dominance in the early hours of trading. An attempt by bulls to rally off support at $64,000 was swiftly thwarted, even before the uptrend could gain momentum.

Bears seized the opportunity and pressed their advantage, driving Bitcoin down to a low of $62,745 shortly after the market opened in the United States. However, their triumph proved ephemeral as bulls regrouped and pushed prices back above $63,800, where Bitcoin currently trades.

ETF Flows Slow, Impacting Bitcoin's Price Dynamics

The indecisive price action in Bitcoin mirrors the fading enthusiasm for U.S.-listed sports Bitcoin exchange-traded funds (ETFs). The feverish pace of inflows witnessed in the months following their launch has subsided to a mere trickle.

Wednesday's trading session saw ETFs experience a collective outflow of $120.64 million, marking the end of a 71-day inflow streak for BlackRock's iShares Bitcoin Trust (IBIT), as noted by Bloomberg Senior ETF Analyst Eric Balchunas.

Morgan Stanley Mulls Direct ETF Recommendations

Despite the slowdown in ETF flows, there are signs of potential buying activity on the horizon. According to AdvisorHub, Morgan Stanley is contemplating allowing its 15,000 brokers to recommend Bitcoin ETFs to clients.

Morgan Stanley has previously only offered unsolicited access to ETFs, requiring customers to initiate contact with their advisors about investing. The firm is now considering permitting advisors to actively recommend these products to clients, a move that could boost demand while exposing the wirehouse to increased liability.

Hong Kong Embraces Spot BTC ETFs

In a positive development for Bitcoin, Hong Kong regulators have approved three spot BTC ETFs, set to commence trading on April 30. This marks the first wave of approvals in the region.

Moreover, Hong Kong will also see the launch of three Ethereum (ETH) ETFs, surpassing U.S. issuers who continue to face hurdles in gaining approval from the Securities and Exchange Commission (SEC).

Decisions on spot Ether ETF applications from VanEck and ARK Investment Management are expected by May 23 and May 24, respectively. However, sources have expressed pessimism about the SEC's receptiveness to these applications, with Reuters reporting that discouragingly one-sided meetings with the agency have heightened concerns.

Fidelity's Long-Term Optimism

Amidst the daily fluctuations and ETF chatter, Fidelity Digital Assets maintains a bullish stance on Bitcoin's long-term prospects. The firm has observed a 20% increase in the number of wallets holding $1,000 or more worth of BTC since the beginning of 2024.

"This increase shows that despite the upward trend in prices, there is a continued increase in the number of smaller addresses purchasing and holding Bitcoin," Fidelity analysts noted in a report. "As a result, this increase shows that Bitcoin is bought and adopted by more people."

The analysts concluded that the surge in smaller investors embracing Bitcoin represents a significant milestone and bodes well for its future.