The launch of new Bitcoin ETFs in the United States has set a record for popularity among investment instruments. Contrary to numerous cryptocurrency critics, demand for Bitcoin ETFs in the first few days of their launch exceeded all expectations. The total trading volume for the ten exchange-traded funds (ETFs) on January 16, 2024, was nearly three times higher than the cumulative volume of all 500 ETFs launched in 2023. Traders generated approximately $1.8 billion in trading volumes within a day, marking a significant milestone in the ETF space.
The approval of new spot Bitcoin ETFs in the US was a highly anticipated event. Despite potential drawbacks, such as cryptocurrency exchange Coinbase and trusted custodians holding a considerable reserve of coins, the introduction of these ETFs has proven to be a game-changer.
According to Bloomberg analyst Eric Balchunas, the trading volume for the 500 ETFs on January 16 amounted to only $450 million. This emphasizes the extraordinary nature of the $10 billion trading volume achieved by the new Bitcoin ETFs in their first three days. The iShares Bitcoin Trust (IBIT), managed by investment giant BlackRock, emerged as a leader, attracting $497 million in just three days.
BlackRock played a pivotal role in securing approval for new investment instruments based on cryptocurrencies. When the company filed its own application for a Bitcoin ETF in the summer of 2023, it sparked a surge of interest in the financial industry. Other major companies joined the initiative, simultaneously launching new investment products.
Another factor influencing the approval of new Bitcoin ETFs was the Securities and Exchange Commission's (SEC) loss in a court case against Grayscale, as revealed by SEC Chairman Gary Gensler. The lawsuit was filed after the SEC prohibited Grayscale from converting its Bitcoin trust (GBTC) into a full-fledged ETF.
The total trading volume for all new spot Bitcoin ETFs reached almost $10 billion in the first three days of trading, with exact figures amounting to $9.68 billion.
Despite Grayscale's Bitcoin Trust (GBTC) maintaining its lead in overall trading volume, exceeding $5.1 billion, the fund experienced significant outflows as investors sought to reduce their positions in the GBTC.
The success of these ETFs is attributed to the fees associated with interacting with them. Grayscale charges a 1.5% fee to its clients, whereas BlackRock's fee is at 0.25%. Initially, BlackRock announced a 0.3% fee but decided to reduce it due to competitive pressure.
While ETFs from Franklin Templeton have the lowest fees at 0.19%, their product ranked third to last in the overall Bitcoin-based ETF rating.
In conclusion, the introduction of new Bitcoin ETFs has attracted attention from institutional investors with significant capital. The cryptocurrency market has not experienced a major correction following the ETF approval. Meanwhile, altcoins are showing gradual growth.
A new trend has emerged in the industry, with investors anticipating the approval of Ethereum-based ETFs shortly after Bitcoin ETFs. BlackRock filed a corresponding application with the SEC in the fall of 2023. However, the likelihood of Ethereum spot ETF approval in the near future remains below 50%, according to Mark Yusko, the head of Morgan Creek Capital.
In summary, the new Bitcoin ETFs have indeed captured the attention of large-scale professional investors. Importantly, the cryptocurrency industry has not yet entered a full-fledged bull run, indicating that we have yet to experience the full impact of this new investment instrument on the coin market.