The spot Bitcoin exchange-traded fund (ETF), a new product in the financial market, has completed its first week of trading. This event represents several key milestones in blending cryptocurrencies with mainstream financial markets. The Spot Bitcoin ETF, launched amidst high expectations, is an important move to provide investors with a more regulated and safer option to explore Bitcoin. In this article, we unpack our weekly insights into Spot Bitcoin ETFs, aiming to highlight the potential and implications of this powerful investment product.
Spot Bitcoin ETF Trading from Day 1
On the eagerly anticipated opening day of trading for the U.S. spot Bitcoin exchange-traded fund, investors actively participated in stock trading in 10 SEC-approved funds. Grayscale Bitcoin Trust, the largest Bitcoin fund worth $28 billion, recorded the highest stock turnover, with trading volume exceeding $2 billion, according to early trading volume figures. The cumulative transaction amount on this day exceeded $4.6 billion.
According to a Bloomberg report, about $2.33 billion worth of Grayscale fund shares were traded during the day, which is roughly the same volume as the total volume of all other new ETFs combined.
Notably, BlackRock’s spot Bitcoin exchange-traded fund (ETF) achieved a significant milestone, amassing $1 billion in assets in just its first four days of trading. This performance makes it the first recently launched ETF tracking the spot Bitcoin price to reach this asset level, according to data from JP Morgan. Fidelity then entered the fray and became the second company to reach the $1 billion asset goal.
Total trading volume for 11 spot Bitcoin ETFs topped $16.4 billion on Friday, the sixth trading day. As of January 19, Grayscale holds the top spot Bitcoin market share, holding nearly 53% of the shares.
Grayscale, BlackRock, and Fidelity are still the major players, accounting for over 90% of total volume. Daily trading volume jumped to $2.6 billion on January 19, compared to $2.1 billion the previous day. This figure is still significantly lower than the $3 billion seen last Friday and the initial $4.6 billion on the first day of trading.
Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, pointed out that BlackRock and Fidelity’s Spot Bitcoin ETF is leading in terms of new capital inflows among 11 cryptocurrency-backed products traded on various exchanges. These two funds each received inflows of more than $400 million. As a result, Bitcoin ETFs have surpassed silver ETFs in size in the US due to significant market interest.
BTC price struggles due to increased GBTC outflows
Amid increasing trading volume for spot Bitcoin ETFs, BTC price continues to struggle to validate a clear upward movement. Interestingly, Bitcoin has declined from the $49,000 level and is currently targeting a decline below the $40,000 level. This may mean that the emergence of new ETFs does not create a supply shortage to meet the new demand associated with those funds.
It is possible that the Grayscale leak may have disrupted supply. Recent Bitcoin purchases linked to exchange traded funds (ETFs) have been somewhat balanced by continued withdrawals from the Grayscale Bitcoin Trust (GBTC). Approximately 10,824 BTC worth approximately $445 million was sold. Approximately 38,000 BTC has been withdrawn from GBTC since its conversion to a spot ETF on January 11.
Grayscale’s massive outflow has caused Netflow to move into negative territory, which is having a bearish impact on the BTC price. Another potential reason investors could target Grayscale for outflows is the ETF’s 1.5% expense ratio, which is steep compared to the 20-39 basis points for other new funds, most of which have waived or reduced fees for several months. It’s level. It is difficult to understand why a rational investor would pay more than three times the fees for a fund holding the same assets.
Grayscale Investment CEO Michael Sonnenshein said in a recent World Economic Forum interview in Davos that most of the 11 spot Bitcoin ETFs approved by the US SEC are unlikely to succeed.
These ETFs, which began trading shortly after approval on January 10, are competing with lower fees to between 0.2% and 0.4%, and some are offering temporary fee waivers. In contrast, Grayscale, the largest Bitcoin holder among ETF issuers, charges up to 1.5% with no exemption.