Spot Bitcoin ETFs have only been trading for exactly two months and they have already had a massive impact on the cryptocurrency industry.
Whether it was the amount of inflows, the number of bitcoins acquired, or the high levels of transaction volume, they exceeded predictions across the board. At the same time, they supported a bitcoin-led bull market and revitalized the crypto industry. In fact, these days it’s hard to say who is more bullish on Bitcoin, MicroStrategy’s Michael Saylor or BlackRock’s Larry Fink.
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ETFs have seen broad success well beyond the most optimistic expectations,” Brian Rudick, research analyst at GSR, told The Block. “Their inflows of more than $10 billion in just two months are close to what most expected to do in the first year, and there are arguments for why inflows could increase from here on, such as increased sales efforts of issuers, their addition to wealth management products.offers and standardize GBTC outputs.
“They were almost the sole driver of the BTC price rise from around $25,000 to $70,000, were the most successful ETF launch in history in many ways, and perhaps more More importantly, have legitimized and cemented digital assets as an asset class,” he added.
Eric Balchunas, senior ETF analyst at Bloomberg, shares a similar view. “First two months officially on the books (feels like six) and the ten Bitcoin ETFs now have over $55 billion in assets, with exactly double that volume at $110 billion. If those were the ending numbers year, I would call them a success,” he said. posted on. “To do it in eight weeks is just absurd.”
Balchunas added that BlackRock and Fidelity ETFs ranked third and fourth, respectively, in terms of year-to-date flows among all ETFs as of mid-March, alongside some of the largest ETFs in the world. He stressed that this was not something he would have predicted.
Calling the bitcoin ETF spot launches in January a “monumental success,” Nate Geraci, president of investment advisor The ETF Store, said: “These products performed flawlessly, trading at tight spreads and closely tracking the bitcoin spot price. very low fees on the nine new ETFs and this was a clear victory for investors.
Capture 800,000 bitcoins
ETFs have certainly reached some important milestones. They recovered an additional 180,000 bitcoins on top of the bitcoin that Grayscale’s Bitcoin Trust held when it was converted to an ETF. Combined with rising prices, this saw the value held in ETFs almost double, from $28.9 billion on the first day to $56.6 billion two months later.
Spot Bitcoin ETFs now hold a total of 802,000 Bitcoins. These holdings represent 4% of the circulating bitcoin supply and are likely higher if you exclude lost or inaccessible coins.
Scott Johnsson, general partner at Van Buren Capital, said his base case for Bitcoin ETFs was to compare the launch of the first gold ETF in 2004. He expected modest flows in the range of $50 million per day.
“I think we are now at a point where we can say pretty definitively that my expectations have been blown out of the water. Compared to GLD, daily net inflows on a relative basis (% of assets under management or % total entries to date) and absolute have been extraordinarily strong,” he said.
Johnsson added that he still sees the emergence of the Bitcoin ETF category as similar to the adoption of a GLD-type product, but on a much faster timetable. “While it took GLD about a decade to saturate, spot BTC ETFs could do the same in much less time. That’s not to say there won’t be dips/exits along the way, but what we’ve seen so far is truly incredible,” he said.
Bitcoin overtakes money
Although demand for bitcoin from ETFs pushed the price of bitcoin higher, this was aided by additional demand from Saylor’s MicroStrategy. He recently purchased an additional 12,000 bitcoins for approximately $821.7 million in cash, bringing his total bitcoin holdings to 205,000. At the same time, the market capitalization of Bitcoin has surpassed that of silver.
ETFs also captured 90% of the market share between themselves and futures-based Bitcoin ETFs, with BlackRock, Grayscale and Fidelity accounting for the lion’s share of the cumulative $100 billion trading volume. BlackRock saw a record inflow of $788 million in a single day, with Fidelity’s highest day being $473 million in inflows.
“With these record flows, Bitcoin buyers are recognizing the cost and security benefits of the ETF wrapper for certain use cases,” said Matthew Sigel, head of digital asset research at VanEck, one ETF providers. “BTC’s market structure appears permanently altered, with the 3-4 p.m. close in New York now the most liquid part of the day.”
Sigel explained that high volumes occur during this time because the benchmarks that market makers and ETF sponsors use to settle are priced at that time.
Expansion into more wealth management platforms
What also stands out about the success of ETFs is that they are still not available on all platforms, unlike many more traditional ETFs. For example, Vanguard continues to mock the products and has stated that it has no plans to change its mind. But other platforms are not opposed to ETFs in principle; they just haven’t listed them yet.
“Over the next month, we could see larger wealth management platforms integrating ETFs, opening another floodgate of capital,” said Sui Chung, CEO of CF Benchmarks, a Kraken company and licensed index provider. the FCA used by several of them. spot Bitcoin ETFs.
“The fact that some of these ETFs regularly average trading volumes in the billions of dollars and have assets under management in excess of $10 billion means that they could also be large and liquid enough to be considered by investors. pension fund,” Sui added. “Of course this will be up to the discretion and investment philosophy of the investment teams and directors, but most of these funds already own commodities so it is not inconceivable that they could use the bitcoin to further diversify returns for plan holders.”
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