Weekly insights from the Spot Bitcoin ETF are discussed below, shedding light on the potential and implications of these solid investment offerings.
The Spot Bitcoin exchange-traded fund (ETF), a new product in the financial market, has just concluded its first week of operations. This event marks several key milestones in the combination of cryptocurrencies with major financial markets.
Launched amid high expectations, the Spot Bitcoin ETF is a crucial move, providing a more regulated and secure option for investors to explore Bitcoin.
Bitcoin ETF Spot Trading from Day 1
On the first day of trading of the long-awaited US-based spot bitcoin exchange-traded funds, investors actively participated in trading shares of ten SEC-sanctioned funds. Initial volume figures revealed that Grayscale Bitcoin Trust, the largest bitcoin fund valued at $28 billion, saw the largest share turnover, with trading volumes exceeding $2 billion. The accumulated trading volume for that day exceeded $4.6 billion.
Bloomberg reports indicate that approximately $2.33 billion in Grayscale fund shares were traded throughout the day, a figure that nearly equals the total volume traded in all other new ETFs combined.
The total trading volume of the 11 spot bitcoin ETFs surpassed $16.4 billion on their sixth day of trading on Friday. As of January 19, Grayscale has the top market share in Bitcoin spot, with nearly 53% ownership.
Grayscale, BlackRock and Fidelity remain the predominant players, with more than 90% of the total volume. Daily volume saw an increase, reaching $2.6 billion on January 19, up from $2.1 billion the previous day. These figures are still considerably lower than the $3 billion volume seen last Friday and the initial $4.6 billion on the first day of trading.
BTC Price Struggles Amid Growing GBTC Outflow
Amid rising trading volume for the Bitcoin Spot ETF, BTC price continues to struggle to validate a clear bullish move. Interestingly, Bitcoin fell from its $49,000 level and is currently aiming to fall below the $40,000 level. This could indicate that the emergence of the new ETFs is not causing a lack of supply for any new demand linked to the funds.
Grayscale’s departures may have freed up supply. Recent Bitcoin purchases tied to exchange-traded funds (ETFs) were somewhat balanced by ongoing withdrawals from the Grayscale Bitcoin Trust (GBTC). Approximately 10,824 BTC were sold, valued at around $445 million. Since its transformation into a spot ETF on January 11, nearly 38,000 BTC have been withdrawn from GBTC.
The massive Grayscale outflows are sending the Netflow into the negative region, creating a bearish impact on the BTC price. Another possible reason Grayscale could have been targeted by investors for fund outflows is the ETF’s 1.5 percent expense ratio, high compared to the 20-39 basis points of the other new funds. most of whom have resigned or reduced their commissions for several months. It is difficult to understand why a rational investor would pay more than three times the fee for a fund that owns the same asset.
Grayscale Investment CEO Michael Sonnenshein, in a recent interview at the World Economic Forum in Davos, stated that most of the 11 Bitcoin spot ETFs approved by the US SEC are unlikely to succeed.
These ETFs, which began trading shortly after their approval on January 10, compete by reducing fees to 0.2%-0.4%, with some offering temporary fee waivers. By contrast, Grayscale, the largest Bitcoin holder among these ETF issuers, charges up to 1.5% with no waivers.
By Audy Castaneda
