The US Bitcoin ETF is off to a tumultuous start. It’s only midday, and the 11 spot Bitcoin ETFs approved by the SEC yesterday have seen a combined $1.9 billion worth of trading volume, surpassing analysts’ expectations.
Bitcoin was relatively subdued on Thursday, despite surging to nearly $49,000 shortly after U.S. markets opened. At the time of this writing, it was changing hands. According to CoinGecko, it is $46,610.54.
BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Trust (FBTC) are by far the leaders, accounting for 41% and 27% of the volume, respectively. These two ETFs alone have generated $1.3 billion in trading volume to date.
Among the non-Wall Street set, the ARK 21Shares Bitcoin ETF (ARKB) achieved about $208 million, or about 13% of total volume, as of 1 PM ET on Thursday.
Last October, as the race for Bitcoin ETF offerings appeared to be heating up, Adam Guren, co-founder of cryptocurrency hedge fund Hunting Hill Digital, said: decryption Explosive ETF launches are not that common.
“Achieving $500 million in first-day inflows is also a notable challenge,” he said.
Last week, VettaFi’s Dave Nadig and co-author of “The Comprehensive Guide to Exchange-Traded Funds” said: decryption Once approved funds are launched with the Grayscale Bitcoin Trust, GBTC could absorb most of the trading volume, but not for the reasons the company wants.
“Where the volumes appear, there’s a little secret sauce, a mystical bonding quest,” Nadig said last week. He added, “If GBTC is included in the initial launch, we will get all the volume because there are so many people.” People who are already in it may want to take it down.”
Grayscale Bitcoin Trust (GBTC) accounted for $217 million worth of trading volume on the opening day, which is approximately 12% of the total volume traded so far. However, GBTC is not a perfect 1:1 comparison to any ETF that just started trading today. GBTC launched in 2013 as an investment product available to accredited investors.
As part of yesterday’s SEC approval, Grayscale was permitted to convert GBTC into a spot Bitcoin ETF.
The Securities and Exchange Commission (SEC) made history yesterday afternoon when it approved a rule change that would allow Bitcoin ETFs to be traded on NYSE Arca, Nasdaq, and Cboe. The industry has been pushing to make these products available to U.S. investors for the past decade. This is because spot Bitcoin ETFs provide a way for investors to gain exposure to BTC as an asset without having to actually purchase and store the cryptocurrency.
However, the ease with which investors can now gain exposure to BTC through ETFs comes at a cost. By design, exchange-traded funds (ETFs) charge sponsor fees. It pays for all overhead costs borne by the issuer and asset management. Ahead of SEC approval yesterday, issuers engaged in a dizzying fee dishonor game.
After initially setting the fee at 0.30%, which analysts said was very competitive, BlackRock ratcheted up the competition by lowering the fee to 0.25% on Wednesday, just hours before the SEC approved all trading funds.
And Bloomberg Intelligence analyst Eric Balchunas said it was highly unlikely any fund would raise fees going forward.
It’s not like that. ETFs only reduce fees, not increase them. Doing so will upset the advisor and tarnish their brand. This is #36 why ETFs that are so popular with investors don’t invest that way. Money flows where it gets the best treatment. https://t.co/ysu05bBmZk
— Eric Balchunas (@EricBalchunas) January 10, 2024
Asked how likely it was that ETF issuers would later raise fees, he explained on Twitter yesterday: “ETFs only cut fees, they never increase them.” “Doing so will upset the advisors and tarnish their brands.”
The massive debut comes at the same time that a number of financial institutions, including Vanguard and Merrill Lynch, have decided to ban their customers from purchasing Bitcoin ETF shares through their trading platforms.
Merrill Lynch immediately responded to a request for comment. decryption.
Vanguard has not been completely opposed to cryptocurrency assets in the past. Just six months ago, it increased its stake in Bitcoin mining companies Riot Blockchain (RIOT) and Marathon Digital (MARA). However, just because an institution feels comfortable owning bitcoin mining stocks does not mean that a bitcoin spot ETF is considered a suitable investment for its clients.
“While we continue to evaluate brokerage offerings and evaluate the entry of new products to the market, spot Bitcoin ETFs will not be available for purchase on the Vanguard platform,” a Vanguard spokesperson said. decryption From the statement. “We also have no plans to offer the Vanguard Bitcoin ETF or any other cryptocurrency-related products.”
The statement went on to say that the Bitcoin ETF product is “inconsistent” with Vaguard’s view that a balanced long-term investment portfolio should include asset classes such as stocks, bonds, and cash.
Meanwhile, Merrill Lynch said: fox business Merrill Lynch has decided to take a wait-and-see approach as it is unclear whether the Bitcoin ETF will trade efficiently.
Editor’s note: This article was updated at 3:00 PM ET to add comment from Vanguard.
Edited by Guillermo Jimenez.
