- Trading volume in spot Bitcoin ETFs has reached $11 billion, but the rate of growth in the flow of funds into the products is gradually declining.
- Experts differ in their assessments of the risks and opportunities for Bitcoin in connection with exchange-traded funds.
Cumulative trading volume of 11 spot Bitcoin ETFs in the US reached $11.1 billion in the first four days after the launch of new products, reports The Block.
Funds from Grayscale, BlackRock and Fidelity lead the pack, accounting for more than 90% of the total.
SEC approved the launch of exchange-traded funds based on the spot price of Bitcoin on January 10. The very next day, investment instruments began to be traded on exchanges CBOE, NYSE and Nasdaq.
On Thursday, January 11, product trading volumes reached $4.6 billion. On Friday, the figure dropped to $3 billion and continued to fall in subsequent trading days – $1.8 billion on Tuesday and $1.5 billion on Wednesday.
Bloomberg stock analyst Eric Balchunas noted that as of Tuesday, the net inflow of funds into the Bitcoin ETF amounted to more than $782 million. New products fully compensated for the outflow of $1.1 billion from the Grayscale fund, the expert noted. The company converted an existing trust with AUM over $29 billion at that time.
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, the influx of funds for 10 providers (excluding Grayscale and ProShares) reached $932 million. BlackRock and Fidelity became the “champions” with $373 million and $359 million, respectively, BitMEX Research specialists noted.
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)
— BitMEX Research (@BitMEXResearch) January 18, 2024
Previously, industry experts noted the size of the ETF management fee set by Grayscale at 1.5%. Most issuers of new crypto products have decided not to charge fees during the initial period. Analysts doubted that against this background the fund from the daughter DCG will become the preferred choice for investors.
The launch of spot Bitcoin ETFs helped the weekly influx of investments in crypto products approach a historical maximum, CoinShares specialists noted in a report. From January 6 to 12, the figure was $1.19 billion. This is not far from the record of $1.5 billion recorded during the launch of Bitcoin futures funds in October 2021
“In the medium to long term, the development of ETFs is great news for cryptocurrency as an asset class as it truly puts it in the spotlight for millions of investors and retirement plan owners. However, inflows will take time to build and the recent frenzy may have left short-term traders looking for quicker profits,” commented Douglas Comyn of XBTO.
Eric Balchunas drew attention to the steady reduction in premiums in new ETFs and discounts in the Grayscale fund that have arisen since the start of trading. In his opinion, this positive trend will “provide conditions for investors to get better deals and accelerate the flow of funds 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
Bitcoin ETF Risks and Potential Impact on Price
Industry experts were generally optimistic about the impact of the launch of spot Bitcoin ETFs in the United States on the price of the cryptocurrency.
Digital gold quotes at the launch of the products first exceeded $48,000, but then fell below $42,000. At the time of writing, the asset is trading at levels around $42,700.
In December, CryptoQuant analysts assumed that the coin would fall to $32,000 as a result of a correction after the launch of exchange-traded funds.
But for long periods, commentators predict the growth of Bitcoin, including due to the emergence of spot ETFs. For example, bestselling author of Rich Dad Poor Dad and entrepreneur Robert Kiyosaki predicted quotes of up to $150,000.
ARK Invest founder and CEO Cathie Wood announced a possible price increase to 1.5 million by 2030. According to Tom Lee, co-founder of the analytical firm Fundstrat, the price of digital gold will reach $500,000 in the next five years. In addition to ETFs, the expert considers the upcoming halving in the spring of 2024 to be an additional driver.
The founder and head of SkyBridge Capital, Anthony Scaramucci, believes that Bitcoin prices will exceed $170,000 in 2025.
However, a number of experts point to the risks that spot Bitcoin exchange-traded funds pose for the cryptocurrency. Among them they name:
- the emergence of a single point of failure in the form of institutional custodians;
- the danger of transferring traditional finance practices into the ecosystem;
- possible attempts by players TradFi influence the development of a digital asset.
SEC Chairman Gary Gensler, on the eve of the approval of spot ETFs, recalled the risks of Bitcoin for investors in general. The head of the department has his own arguments repeated and after the start of trading in products.
Let us remind you that traditional US financial institutions have taken opposite positions in relation to Bitcoin exchange-traded funds: from wide access to a ban.
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