US bitcoin ETFs see $4.5B in volume in first day of trading

US bitcoin ETFs see $4.6B in volume in first day of trading

Spot Bitcoin ETFs top $4.5B total volume on the first day of trading
Spot Bitcoin ETFs topped $4.5 billion in trading volume on the first day of trading, but one of the issuers has clarified it hasn’t yet made the cut.

Spot Bitcoin ETFs top $4.5B total volume on the first day of tradingNEWS
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The first day of trading for a suite of new Bitcoin
BTC

tickers down
$45,936

exchange-traded funds (ETFs) has gone off with a bang, with BlackRock, Grayscale, and Fidelity’s ETFs coming out on top in total volumes. One issuer, however, didn't get to start as expected.

Aggregated data from Yahoo Finance, compiled by Cointelegraph, shows that the total volume across ten of the spot Bitcoin ETFs reached more than $4.5 billion in total volume for day one trading.

BlackRock’s Bitcoin ETF, the iShares Bitcoin Trust (IBIT), was the top performer of the newly-listed funds, handling just over $1 billion in volume — 22% of the group's total volume — per Yahoo Finance data.

BlackRock’s iShares Bitcoin ETF (IBIT) closed down 4.69% on the day. Source: Yahoo Finance
Following close behind was Fidelity’s spot Bitcoin ETF — FBTC — which witnessed some $685 million in day one trading volume.

Grayscale’s Bitcoin ETF, which trades under the ticker GBTC, notched $2.2 billion in total volume. The investment vehicle is a conversion of its pre-existing Grayscale Bitcoin Trust.

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Hashdex missed the opportunity to be counted among spot Bitcoin ETFs for the day. While the SEC approved Hashdex's 19b-4 filing — which would allow its spot ETF product to be listed on U.S. stock exchanges — the SEC did not make its S-1 form effective, meaning that Hashdex's "DEFI" fund is still only trading as a futures-based ETF. The company also issued a corrected statement noting the fund did not yet hold any spot Bitcoin in its portfolio.

It’s important to note that trading volume includes inflows and outflows and doesn’t paint a full picture of how much of the day’s trading activity was buying versus selling.

Senior Bloomberg ETF analyst Eric Balchunas theorized that the vast majority of trading activity for GBTC was selling, as investors rotated out of the fund into newer, lower-fee products such as BlackRock’s and Fidelity’s respective ETFs. His colleague James Seyffart shared the same view.

Meanwhile, the ProShares Futures Bitcoin ETF (BITO) experienced record-breaking trading activity of its own, with more than $2 billion in total volume on the day.

This is also theorized to be comprised largely of selling, as investors move out from futures-based Bitcoin exposure, to cheaper, less volatile spot-based exposure.

Related: Bitcoin spot ETF trading volume surpasses $1.6B within minutes of launch

Timothy Peterson, an investment manager at Cane Macro, estimated that the buying activity across the ETFs means that approximately 47,000 Bitcoin — worth $2.1 billion at current prices — will need to be purchased on the spot market.

Balchunas said that investors looking to understand the impact of the ETFs on underlying Bitcoin purchases will most likely have to wait until later the morning of Jan. 13 to get a better idea of spot inflows.

U.S.-listed bitcoin exchange-traded funds (ETFs) saw $4.6 billion worth of shares trade hands as of Thursday afternoon, according to LSEG data, as investors jumped into the landmark products approved by the U.S. securities regulator on Wednesday.

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The products mark a watershed moment for the cryptocurrency industry that will test whether digital assets - still viewed by many professionals as risky - can gain broader acceptance as an investment.

Eleven spot bitcoin ETFs - including BlackRock's iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF, among others - began trading Thursday morning, kicking off a fierce competition for market share.
Grayscale, BlackRock and Fidelity dominated trading volumes, the LSEG data showed.

"Trading volumes have been relatively strong for new ETF products," said Todd Rosenbluth, strategist at VettaFi. "But this is a longer race than just a single day's trading.

The green light from the U.S. Securities and Exchange Commission for the products finally came late on Wednesday, following a decade-long tussle with the crypto industry.

Related video: SEC Approval of Bitcoin ETFs Could Revitalize the Crypto Market (Money Talks News)

Money Talks News
SEC Approval of Bitcoin ETFs Could Revitalize the Crypto Market
Some executives called out bitcoin as a high-risk investment, and Vanguard - the largest provider of mutual funds - said it had no plans to make the new batch of spot bitcoin ETFs available on its platform to its brokerage clients.

The SEC had earlier rejected all spot bitcoin ETFs on investor protection concerns. SEC Chair Gary Gensler said in a statement on Wednesday that the approvals were not an endorsement of bitcoin, calling it a "speculative, volatile asset."

The ETF launches lifted the price of bitcoin up to its highest level since December 2021. It was last up 0.77% at $46,303, while the price of ether, the second-largest cryptocurrency, was up 2.79% at $2597.95.

RACE FOR MARKET SHARE

The regulatory nod sparked intense competition for market share among the issuers, some of whom slashed the fees for their products well below the U.S. ETF industry's standard even before Thursday's launch.

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Fees on the new bitcoin ETFs range from 0.2% to 1.5%, with many firms also offering to waive fees entirely for a certain period or for a certain dollar volume of assets. After its ETF started trading, Valkyrie cut its fees a second time to 0.25% and waived them for the first three months.

Grayscale was approved to convert its existing bitcoin trust into an ETF on Thursday, overnight creating the world's largest bitcoin ETF with more than $28 billion in assets under management.

Estimates for how much spot bitcoin ETFs could reel in vary widely. Analysts at Bernstein estimated that flows will build up gradually to cross $10 billion in 2024, while Standard Chartered analysts this week said the ETFs could draw $50 billion to $100 billion this year alone. Other analysts have said inflows could be $55 billion over five years.

As the ETFs began trading on Thursday, market participants were closely watching bid-ask spreads: the difference between the price for a trader to buy into an ETF and the price it can be sold. ETFs with narrower spreads are typically viewed as more desirable.

Trading volume, internal plumbing and the number of participants involved "are critically important to driving the spreads to a good spot," said Jason Stoneberg, director of product strategy at Invesco, whose ETF with Galaxy Digital debuted on Thursday.

Some analysts cautioned that the euphoria around the approval might be premature. The broader investment community still views cryptocurrencies as risky, with scandals such as the implosion of crypto exchange FTX in 2022 adding to investors’ wariness.

A Vanguard spokeswoman said the firm had no plans to launch its own crypto investment products, and that its focus remains on core asset classes such as stocks, bonds and cash, which it views "as the blocks of a well-balanced, long-term investment portfolio."

Speaking at a webinar on Thursday, Sharmin Mossavar-Rahmani, head of the Investment Strategy Group and chief investment officer of Wealth Management at Goldman Sachs, said cryptocurrencies had no place in an investment portfolio.

"When you think about it, where is there any value to something like bitcoin?," she said. "We don’t think it is an asset class to invest in."

CRYPTO STOCKS GAIN

Still, some expect the products to pave the way for even more innovative crypto ETFs, including spot ether products.

Grayscale CEO Michael Sonnenshein said in an interview Thursday that the firm plans to file for a covered call ETF in an effort to allow investors to generate income from options on its spot bitcoin product.

Cryptocurrency-related stocks initially climbed higher on Thursday, but ended the day lower, with bitcoin miners Riot Platforms and Marathon Digital dropping 15.8% and 12.6% respectively.

Bitcoin investor Microstrategy fell 5.2% and crypto exchange Coinbase 6.7%. The ProShares Bitcoin Strategy ETF, which tracks bitcoin futures, gained 0.44%.

Also on Thursday, Circle Internet Financial, the company behind stablecoin USDC, said it had confidentially filed for a U.S. initial public offering. Circle controls the issuance and governance of USDC, a cryptocurrency pegged to the U.S. dollar.

(Reporting by Manya Saini in Bengaluru, Hannah Lang in Washington and Suzanne McGee; Additional reporting by Niket Nishant in Bengaluru, Medha Singh, Davide Barbuscia and Noel Randewich; Editing by Arun Koyyur and Nick Zieminski)