Daily Inflows to Bitcoin ETFs Return to Record Levels

On February 13, the net inflow of assets into spot Bitcoin ETFs reached $631.2 million, second only to the first day of trading for these products, which saw $655.2 million.

Same data in BTC terms. +12,736 BTC flow on 13th Feb 2024 pic.twitter.com/ogUVHjVDbZ

— BitMEX Research (@BitMEXResearch) February 14, 2024

In terms of Bitcoin, the daily increase in AUM reached 12,736 BTC.

BlackRock’s fund showed strong performance, accounting for $493 million of the total (9,943 BTC), noted experts from BitMEX Research. The amount of cryptocurrency held by the iShares Bitcoin Trust exceeded 105,000 BTC.

The Grayscale Bitcoin Fund, converted from a trust that had been operating since 2015, has been steadily losing capital. At the time of conversion to an ETF, GBTC managed assets worth approximately $29 billion.

Since its transformation into an exchange-traded fund on January 11, more than $6.5 billion (~156,300 BTC) has been withdrawn from the structure.

The company continues to maintain a 1.5% fee, while most competitors offer zero fees.

Grayscale Confident in Bitcoin Fund’s Prospects

Even before the approval of spot Bitcoin ETFs by the SEC, industry experts questioned the market appeal of Grayscale’s offering.

However, according to the company’s CEO, Michael Sonnenshein, the fee size is justified by their “10 years of successful operations” and a “diversified investor base.” He predicted the failure of most of the 11 launched Bitcoin ETFs, noting that they still need to build a reputation.

In October 2023, Grayscale won a court case against the SEC. The court rejected the Commission’s appeal against a previous decision that required a review of the refusal to convert GBTC into a spot ETF.

This led to increased expectations within the community for positive approval of similar product applications. The Commission indeed intensified communication with potential issuers. In December, SEC Chairman Gary Gensler acknowledged that “court decisions” influenced the agency’s change in stance.

On February 13, opening the panel discussion The Gloves Are Off: The Bitcoin ETF Showdown, moderator Eric Balchunas (Bloomberg exchange analyst) addressed Grayscale’s Director of ETF Development, Dave LaValle:

“He beat Gensler. Not many can say that.”

.@Matt_Hougan on @Vanguard sitting out $BTC ETFs: “There’s some irony there because Wall Street was very anti-Vanguard when they launched, some even said they were anti-American. Then Vanguard was anti-ETFs in the beginning and now they’re one of the biggest ETF issuers in the… https://t.co/VCSllhmxPb

— Eleanor Terrett (@EleanorTerrett) February 13, 2024

Participants discussed the prospects of broad institutional investor adoption of spot Bitcoin funds.

Experts Optimistic About Wall Street’s Bitcoin ETF Adoption

The introduction of new products elicited mixed reactions from traditional finance players, despite the presence of investment giants BlackRock and Fidelity among the issuers.

Their competitor Vanguard decided not to offer clients access to Bitcoin ETFs. The company explained this by stating that the first cryptocurrency is an “immature asset class” and does not align with the firm’s philosophy.

Bitwise’s Chief Investment Officer Matt Hougan found “some irony” in this. He recalled that Vanguard itself faced rejection on Wall Street after its creation and initially opposed the emergence of exchange-traded funds as a product.

“Now they are one of the largest ETF issuers in the world. I would say that eventually they will understand and change their mind,” Hougan noted.

Steve Kurz, Director of Global Development at Galaxy Digital, stated he would be surprised if the top ten exchange brokers do not become participants in the Bitcoin ETF market next year.

“We will likely see FOMO from institutional investors,” he suggested.

In January, Bitcoin ETFs from BlackRock and Fidelity ranked among the top ten largest U.S. ETFs by asset inflows.