Bloomberg Analyst James Seyffart: “Bitcoin Has Lost 50% of Its Value, But There Is a Very Strong Signal”

Although the sharp drop of approximately 50% in the price of Bitcoin (BTC) created the expectation in traditional financial circles that “weak hands” would withdraw from the market, the data shows the opposite.

Appearing on Natalie Brunell’s “Coin Stories” program, Bloomberg’s veteran analyst James Seyffart argued that Bitcoin ETF investors weathered this storm with unexpected resilience.

Seyffart recalled that when Bitcoin ETFs were approved, many critics predicted that investors who invested in these funds would sell at the first sign of serious stress. However, recent data shows that even during periods when Bitcoin experienced value losses of up to 50%, ETF outflows remained quite limited.

According to the analyst, Bitcoin ETF holders are a well-informed group entering the market, aware of the asset’s historical declines (of 70-80%). Seyffart stated, “These investors allocate only 1% to 5% of their portfolios to Bitcoin. Therefore, while a 50% drop is painful, they don’t panic sell because they haven’t lost all their wealth; instead, they see these declines as a buying opportunity to rebalance their portfolios.”

Another important topic highlighted in the program was the preparation by the giant bank Morgan Stanley to launch its own Bitcoin ETF. Seyffart described this step as a “historic turning point.” He noted that the “Bitcoin vs. banks” narrative, popular in 2017, has now given way to banks embracing Bitcoin, and that a giant like Morgan Stanley entering this field is proof that institutional adoption has reached an irreversible point.

According to analyses, an interesting inverse correlation has been observed between gold and Bitcoin ETF flows over the past eight months. Record inflows into gold occurred during periods of Bitcoin outflows, but this trend appears to be rebalancing in recent weeks. While Seyffart maintains his prediction that Bitcoin ETFs could surpass the total size (AUM) of gold ETFs in the long term, he noted that recent price movements have temporarily postponed this goal.

James Seyffart noted that current market trends show investors are no longer solely focused on technology stocks, but rather on real-world assets that cannot be “printed,” such as energy, industrial metals, and infrastructure. He stated that Bitcoin is currently priced by the market as a “growth-driven risk asset,” and emphasized the importance of a diversified portfolio during this period of increased global risk.

*This is not investment advice.