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Eric Balchunas, Senior ETF Analyst at Bloomberg, has provided insights on the autopsy report of the defunct Inverse Cramer Exchange-Traded Fund (ETF).
Jim Cramer's ETF design flaws
Balchunas pointed out critical flaws that plagued the ETF from its inception. The analyst noted that the fund, designed to capitalize on Cramer's stock picks through a long-short strategy, failed to attract investor interest due to high fees and a flawed design that hindered its performance even during favorable market conditions.
Unlike traditional ETFs that typically adopt either a long or short position, the Inverse Cramer ETF followed a long-short strategy, where many of its stock picks offset each other's performance, rendering a breakout next to impossible. Balchunas noted that thematic ETFs like this often require breakout performances to attract investors, a feat the fund could not achieve due to its structural limitations.
The irony of Cramer's ETF struggle is palpable, especially considering his vocal criticisms of Bitcoin. In January, Cramer warned of a potential downturn in Bitcoin's value, citing concerns about its rapid appreciation.
I wrote a post-mortem on the Inverse Cramer ETF, which never had chance thx to its long/short design. An ETF like this needs a shiny object moment (a la SARK) and you can't get that if holdings canceling each other out. From our new monthly "Autopsy Report" @SirYappityyapp… pic.twitter.com/K7wgTV5JNt
— Eric Balchunas (@EricBalchunas) March 13, 2024
However, Bitcoin has defied expectations, surging to an all-time high of $73,000 and continuing its upward trajectory. At the time of writing, Bitcoin is trading at $72,300, with a market capitalization of $1.4 trillion.
Rise of Bitcoin ETFs and institutional adoption
In stark contrast to Jim Cramer’s ETF struggles, Bitcoin spot ETFs have amassed a total net asset value of $58.36 billion, spurred by regulatory approvals allowing institutional capital to enter the market.
Through BlackRock, Fidelity Investments and Ark Invest, among others, more capital inflow through spot Bitcoin ETF is imminent in the long term.
Bernstein, a global asset management firm, has expressed growing confidence in Bitcoin's potential, with forecasts suggesting a potential price surge to $150,000. The firm sees the recent dip in Bitcoin miner stocks as a buying opportunity, anticipating further price appreciation fueled by the upcoming halving event.