The long-awaited launch of spot bitcoin exchange-traded funds (ETFs) in the United States has been met with enormous trading volumes this week. In just the first 3 days, the new ETFs have seen over $10 billion in combined volume according to data from Bloomberg.
Keypoints
- Spot Bitcoin ETFs have seen explosive trading volumes topping $10 billion in just 3 days since launching in the US.
- Grayscale’s GBTC leads with over $5 billion in volume, while BlackRock and Fidelity also see hundreds of millions each.
- The volumes vastly exceed recent ETF launches, with 500 ETFs from 2023 doing just $450 million combined daily.
- GBTC saw over $1 billion in net outflows as investors migrate to new low-fee spot ETFs like IBIT.
- Analysts say volatility and shifts in flows are temporary as the market recalibrates to the new ETF options.
The volumes dwarf recent ETF launches, with 500 ETFs from 2023 doing just $450 million in daily volume together. “Let me put into context how insane $10b in volume is in first 3 days,” said senior Bloomberg analyst Eric Balchunas.
Leading the pack is the newly converted Grayscale Bitcoin Trust ETF (GBTC) with over $5 billion traded. BlackRock’s IBIT and Fidelity’s FBTC also topped $1 billion each. The numbers point to intense early interest from investors in gaining spot bitcoin exposure through the ETF wrapper.
Let me put into context how insane $10b in volume is in first 3 days. There were 500 ETFs launched in 2023. Today, they did a COMBINDED $450m in volume. The best one did $45m. And many have had months to get going. $IBIT alone is seeing more activity than the entire ’23 Freshman… https://t.co/wV1zQFtPW1
— Eric Balchunas (@EricBalchunas) January 16, 2024
While trading has been frenetic, GBTC has seen major outflows of over $1.1 billion as investors shift to competitors. Analysts attribute this to GBTC’s higher 2% fees compared to most other spot ETFs charging less than 1%.
Money has primarily flowed into BlackRock’s IBIT instead, which is on track to dethrone GBTC as the top spot bitcoin ETF by liquidity and volume. “Time is needed for everything to recalibrate,” said Jan3 CEO Samson Mow, predicting equilibrium will return.
Other ETF Issuers Trail Behind
Behind the top three, other major asset managers have seen more modest volume for their initial spot bitcoin ETFs. Ark Invest’s offering traded $124 million on Tuesday, while the Bitwise spot ETF saw $52 million.
Smaller players like Invesco, VanEck, Franklin Templeton, Valkyrie, and WisdomTree logged under $10 million daily. The numbers showcase the dominant position of giants like Grayscale, BlackRock and Fidelity so far.
But increased competition may pressure GBTC to lower its fees, and analysts say it’s still early days in the life of what could be a thriving long-term ETF category. Even at this nascent stage, U.S. spot bitcoin ETF trading tops mature gold and silver ETFs.
Appetite for Leverage
In addition to the spot offerings, asset manager ProShares has applied to launch several leveraged bitcoin ETFs. The planned funds would track daily +/-2x performance or inverse -2x performance of bitcoin using derivatives.
While pending regulatory approval, the move signals rising demand from institutional investors for sophisticated bitcoin investment products beyond simple spot exposure. It follows the success of leveraged equity ETFs in 2022 which also pursue amplified gains.
If launched, analysts predict the leveraged suite could see similar volumes and interest compared to the spot ETFs. With their promise of supersized returns, the products may attract more speculative crypto natives rather than just institutions.
Between intensifying competition in the spot ETF arena and potential new leveraged offerings, the Bitcoin investment fund space will continue rapidly evolving. The recent trading frenzy and $10 billion milestone underscores this substantial appetite from both Wall Street and retail.
