I just noticed an interesting thing about the recent Bitcoin ETF sell-off. Instead of viewing this as a sign of the end of a bull market, Eric Jackson — founder of EMJ Capital — describes it as a market cleansing process. He has a different perspective from the pessimists.

According to Jackson, institutional investors are pulling out of Bitcoin ETFs, but that’s not a bad thing. In fact, it’s paving the way for a different type of capital — long-term funds from sovereign wealth funds, corporate treasuries, and pension funds. This cleansing process will eliminate short-term traders.

The interesting part is that since 2021, most institutions have been mainly buying on the margins, while retail investors have shifted to technology stocks. Jackson observes that Bitcoin now functions more like a high-beta tool within the tech sector, rather than a traditional store of value.

Although net capital continues to flow out of spot Bitcoin ETFs and prices have declined since October last year, Jackson remains optimistic. He believes that when long-term capital — funds not related to tech stocks and with holding periods spanning decades — enters the market, it will stabilize everything. That’s the essence of cleansing — removing unstable elements.

There are two positive signals Jackson is watching. First, the supply of stablecoins is recovering; second, selling pressure from tech investors is ending. If these trends continue, the market could undergo a complete cleansing process and move into a new phase.