Bitcoin Tsunami Continues: $10B ETF Wave Shakes Crypto Market in 3 Days
Van Thanh Le•
Jan 18 2024
Update: As of January 18, 2024, Bitcoin has surpassed silver to become the second largest ETF commodity in the US in terms of assets under management. The cumulative trading volume for the 11 funds exceeded $12 billion within five days of trading, according to data compiled by The Block.
Bitcoin Spot ETFs Take Center Stage: A Tidal Wave of Volume
The long-awaited arrival of spot Bitcoin exchange-traded funds (ETFs) has ignited a firestorm of activity in the crypto market. In just three days, these revolutionary instruments raked in an astonishing $9.8 billion in trading volume, a figure that leaves traditional ETFs in the dust. In 2023, the average daily volume for 500 launched ETFs hovered around $450 million, with the top performer peaking at $45 million. In stark contrast, these Bitcoin ETFs have rewritten the rulebook.
Amidst these developments, January 16 emerged as a historic day. The trading volume for spot Bitcoin ETFs soared to an extraordinary $1.8 billion, more than triple the combined volume of all ETFs launched in the same year. Leading the charge, BlackRock's iShares Bitcoin Trust (IBIT) and Fidelity's Wise Origin Bitcoin Fund (FBTC) have been pivotal in the influx of Bitcoin into these ETFs. The numbers are staggering: IBIT alone added 16,362 BTC, while FBTC contributed 12,112 BTC.
This influx amounts to roughly 21,000 BTC, translating to an eye-popping $894 million, including the 25,000 BTC outflow recorded by Grayscale. BlackRock's IBIT didn't just stop there; it crossed a billion dollars in assets under management within its first week, a feat that cements its position in the cryptocurrency world.
The Bitwise Bitcoin ETF Trust (BITB) also made a strong showing, ranking in the top 5% of 2023's ETF launches by AUM, while Grayscale's Bitcoin Trust ETF grappled with a double-edged sword. Despite dominating with over $5.17 billion in total volume, it faced a mass exodus of nearly $1.2 billion. This shift in investor preference is expected to benefit other Bitcoin ETFs, particularly as Grayscale adjusts to its new ETF format with a 1.5% management fee.
Grayscale's vast Bitcoin holdings, totaling around 617,853 BTC valued at $26.4 billion, underline its significant role in the market. Yet, the shift towards direct Bitcoin holdings by these spot ETFs marks a potential bullish turn for Bitcoin's market. Notably, the approval of these ETFs, a goal since the Winklevoss twins' first application in 2013, represents a regulatory milestone.
In a strategic shift, ARK Invest demonstrated its confidence in the market by purchasing $15.9 million worth of shares in its ARK 21Shares Bitcoin ETF, while simultaneously divesting a similar amount in the ProShares Bitcoin Strategy ETF. This move followed ARK's earlier withdrawal from GBTC. Moreover, BlackRock's acquisition of 11,500 BTC, valued at over $490 million, in a bearish market, further highlights the enduring appeal and potential of Bitcoin in the investment landscape.
Bitcoin ETF Landscape Shifts: ProShares Leverages, VanEck Shuffles
ProShares, a pioneer in the Bitcoin ETF space, is making a bold move with five new filings: leveraged and inverse Bitcoin ETFs. These include the ProShares Plus Bitcoin ETF, Ultra Bitcoin ETF, UltraShort Bitcoin ETF, Short Bitcoin ETF, and ShortPlus Bitcoin ETF.
Particularly noteworthy is one ETF designed to mirror twice the daily performance of the Bloomberg Galaxy Bitcoin Index, a significant step given the recent SEC approval of 11 spot Bitcoin ETFs. These ETFs began trading on January 11, capturing substantial market attention and volume.
Meanwhile, Nate Geraci, President of The ETF Store, weighed in on these developments, expressing skepticism about the likelihood of these ETFs appearing on platforms like Vanguard, citing concerns about Bitcoin's inherent volatility.
On the flip side, VanEck has taken a contrasting path by deciding to shut down its Bitcoin Strategy ETF. This move, coming less than two years after the ETF's debut, follows closely on the heels of the SEC's nod to VanEck's spot Bitcoin ETF. The Bitcoin Strategy ETF is set to depart from the Cboe BZX Exchange by February 6.
This decision was shaped by a blend of factors, including performance, liquidity, assets under management, and investor interest. Notably, VanEck's Bitcoin Trust ETF (HODL) has been active since January 11 and saw a robust trading volume on its inaugural day, marking a pivotal moment in the evolving landscape of Bitcoin ETFs.
The past week has witnessed a tidal wave of change in the Bitcoin ETF landscape. Spot ETFs are surging, attracting major players like BlackRock, while Grayscale navigates a new fee structure. ProShares throws in spicy leveraged options, and VanEck reshuffles its deck. With $10 billion traded in just days, one thing is clear: Bitcoin ETFs are here to stay, and the game is just getting started.
1. How big is the deal with these Bitcoin ETFs?
Huge! In just 3 days, they raked in a staggering $10 billion, dwarfing traditional ETFs. BlackRock's IBIT alone reached $1 billion in assets under management within a week! This marks a major milestone for Bitcoin and potentially signals a bullish market turn.
2. What's happening to Grayscale?
While they still dominate total volume, Grayscale lost $1.2 billion as investors shift towards spot ETFs offering direct Bitcoin holdings. Their new format with a 1.5% fee might further impact their appeal.
3. Are leveraged Bitcoin ETFs coming?
ProShares is making a bold move with 5 new filings, including leveraged and inverse options like "Ultra Bitcoin" and "Short Bitcoin." This caters to experienced investors but raises concerns about volatility for platforms like Vanguard.
4. Is VanEck getting out of the game?
Not entirely. They're closing their Bitcoin Strategy ETF but launched a spot offering, VanEck's Bitcoin Trust ETF (HODL), which saw strong initial volume. This suggests a strategic shift within their Bitcoin ETF portfolio.
This article has been refined and enhanced by ChatGPT.