What’s next for Bitcoin ETFs? Analyst weighs in

Can Bitcoin exchange-traded funds sustain the momentum they’ve shown in the past month?

That’s the main question that Alexandre Schmidt, research analyst at CoinShares has been grappling with.

“After several weeks of outflows, crypto ETFs saw some healthy inflows month-to-date,” Schmidt told DL News. “All these factors point to ETFs being well and alive — whether we will see elevated levels of activity remains to be seen, but in my view the outlook does look promising.”

Despite showing signs of “absurd strength” at times, Bitcoin ETF demand has proven fragile. Heavy selling hit the sector in November of 2025, and flows turned choppy toward year-end.

The trend then flipped decisively negative in early 2026 with billions sold as a new conflict in the Middle East unravelled, even though the past four weeks have recorded inflows, according to data from DefiLlama.

For Schmidt, in fact, the wildcard is the Middle East conflict.

If fighting between Iran, Israel, and the US becomes protracted, the macro repercussions could last far longer than the immediate geopolitical shock.

And that could have a broad effect over assets like Bitcoin.

“The immediate impact I can think of is higher inflation triggered by higher oil prices, which in turn could reduce the chances of rate cuts during 2026,” Schmidt said. “As a result, market liquidity could be reduced and fewer flows going towards assets such as Bitcoin.”

Indeed, while traders previously deemed interest rate cuts as a foregone conclusion this year, they’re now increasingly buying into the idea that central banks may hike interest rates in 2026.

High interest rates are usually seen as a bad omen for risk-on assets as it discourages investors to bet on them.

That said, Schmidt acknowledged that the conflict in the Middle East could increase Bitcoin’s utility as people in affected regions use it to move currency out of Iran and other impacted areas.

Watch Japan

Even so, don’t expect any major records in Q2, said Schmidt.

“Activity in Bitcoin and crypto is somewhat muted in relation to last year,” Schmidt told DL News. “Breaking any significant milestones is unlikely in the near future.”

But he cautioned that “in a volatile world we always need to keep our minds open to sudden shifts in money flows and investor behaviour.”

As for sovereign Bitcoin ETF buyers, Schmidt can’t immediately think of any countries investing in Bitcoin ETFs.

But he’s watching Japan closely.

While newly elected Prime Minister Sanae Takaichi doesn’t appear to have strong crypto views, Finance Minister Satsuki Katayama has a positive stance on crypto assets.

Schmidt explained that he recently returned from meetings with Japanese investors, where he observed a strong push to regulate crypto in the country and eventually launch ETFs there.

That would be a significant market development, he said, “as appetite for crypto is strong among Japanese investors, especially retail.”

Pedro Solimano is a markets correspondent with DL News. Got a tip? Email him atpsolimano@dlnews.com.