- Spot Bitcoin ETF trading volume reached $11 billion, though the growth rate of fund inflows is gradually slowing.
- Experts are divided on the risks and opportunities for Bitcoin related to exchange-traded funds.
The cumulative trading volume of 11 spot Bitcoin ETFs in the US reached $11.1 billion in the first four days following the launch of new products, reports The Block.
Funds from Grayscale, BlackRock, and Fidelity lead the market, accounting for over 90% of the total.
The SEC approved the launch of exchange-traded funds based on the spot price of Bitcoin on January 10. The following day, these investment instruments began trading on the CBOE, NYSE, and Nasdaq.
On January 11, Thursday, trading volumes for the products reached $4.6 billion. On Friday, the figure fell to $3 billion and continued to decline in subsequent trading days — $1.8 billion on Tuesday and $1.5 billion on Wednesday.
Bloomberg analyst Eric Balchunas noted that as of Tuesday, the net inflow into Bitcoin ETFs exceeded $782 million. The new products fully offset the $1.1 billion outflow from Grayscale’s fund, the expert noted. The company converted an existing trust with an AUM of over $29 billion at that time into an exchange-traded fund.
LATEST: Day Three in books the total rolling NET FLOWS is +782M as the Newborn Nine have more than offset the the $GBTC Gouge (which is now up to -$1.2b after half a bil yest, ouch). The Nine’s $2b in aum and $4.5b in volume organic is fab for first 3 days, % prem solid too. pic.twitter.com/NDeubgi8mz
— Eric Balchunas (@EricBalchunas) January 17, 2024
On January 17, inflows for 10 providers (excluding Grayscale and ProShares) reached $932 million. BlackRock and Fidelity were the “champions” with $373 million and $359 million, respectively, noted BitMEX Research specialists.
Cointucky Derby — Day 4 Flow — UPDATE 2
Blackrock number out for 17 Jan 2024. $373m inflow for Blackrock
+$932m of flow for the 10 Bitcoin ETF providers on 17 Jan 2024 (excluding GBTC)
All data is out now for day 4, except GBTC https://t.co/ODs7Zr9KSK pic.twitter.com/Kj7reyMTGv
— BitMEX Research (@BitMEXResearch) January 18, 2024
Previously, industry experts highlighted Grayscale’s management fee for its ETF set at 1.5%. Most issuers of new crypto products decided not to charge fees initially. Analysts doubted that, in this context, the fund from the DCG subsidiary would become the preferred choice for investors.
The launch of spot Bitcoin ETFs helped weekly inflows into crypto products approach a historic high, noted CoinShares specialists in a report. From January 6 to 12, the figure was $1.19 billion, close to the $1.5 billion record set during the launch of Bitcoin futures funds in October 2021.
“In the medium and long term, the development of ETFs is excellent news for cryptocurrency as an asset class, as it truly puts it in the focus of millions of investors and pension plan holders. However, it will take time to generate inflows, and the recent hype may have led short-term traders to seek quicker profits,” commented Douglas Komin of XBTO.
Eric Balchunas noted the steady reduction of premiums that emerged at the start of trading in new ETFs and the discount in Grayscale’s fund. In his view, this positive trend will “provide conditions for investors for better deals and accelerate inflows into products.”
Love to see these lines converging this is the % prem of the Newborn Nine vs GBTC’s % discount. Tighter = better deal for investors and better chance at increasing the net net flow number via @rebeccasin_SK @thetrinianalyst @JSeyff pic.twitter.com/iFsroepYae
— Eric Balchunas (@EricBalchunas) January 17, 2024
Risks of Bitcoin ETFs and Potential Impact on Price
Industry experts generally assessed the impact of the launch of spot Bitcoin ETFs in the US on the cryptocurrency’s price with optimism.
The digital gold’s quotes initially surpassed $48,000 at the start of the products but then fell below $42,000. At the time of writing, the asset is trading around $42,700.
Analysts at CryptoQuant in December suggested that the coin might fall to $32,000 following a correction after the launch of exchange-traded funds.
However, for longer periods, commentators predict Bitcoin’s growth, partly due to the emergence of spot ETFs. For instance, the author of the bestseller “Rich Dad Poor Dad” and entrepreneur Robert Kiyosaki predicted prices up to $150,000.
Founder and CEO of ARK Invest Cathie Wood stated a possible price increase to $1.5 million by 2030. According to Fundstrat co-founder Tom Lee, the digital gold’s rate will reach $500,000 in the next five years. Besides ETFs, the expert considers the upcoming halving in spring 2024 an additional driver.
SkyBridge Capital founder and head Anthony Scaramucci believes Bitcoin’s prices will exceed $170,000 in 2025.
However, some experts point to risks that spot exchange-traded Bitcoin funds pose for the cryptocurrency. Among these, they cite:
- the emergence of a single point of failure in the form of institutional custodians;
- the danger of transferring traditional financial practices into the ecosystem;
- possible attempts by TradFi players to influence the development of the digital asset.
SEC Chairman Gary Gensler, on the eve of approving spot ETFs, warned of Bitcoin’s risks for investors in general. He reiterated his arguments after the products began trading.
Earlier, traditional financial institutions in the US took opposing positions on exchange-traded Bitcoin funds: from broad access to prohibition.