While Grayscale’s Bitcoin fund has historically been a dominant force in the crypto investment space, it has experienced substantial outflows totaling more than $579 million since it commenced trading on January 11.
The crypto market has witnessed a groundbreaking development as spot Bitcoin Exchange-Traded Funds (ETFs) shattered records, amassing an impressive $10 billion in total volume during their first three days of trading. Bloomberg ETF analyst James Seyffart and Yahoo Finance data unveiled these staggering figures, highlighting the extraordinary success of these newly introduced investment products.
Bitcoin ETFs Outpace 2023’s Entire Class
On Jan. 16 alone, spot Bitcoin ETFs generated a remarkable $1.8 billion in volume, surpassing more than three times the combined trading volume of all 500 ETFs launched in 2023.
Eric Balchunas, a Bloomberg ETF analyst, emphasized the magnitude of this achievement, noting that the $10 billion in volume within the initial three days is incomparable to the combined volume of the entire 2023 freshman class of ETFs, which amounted to a mere $450 million.
Let me put into context how insane $10b in volume is in first 3 days. There were 500 ETFs launched in 2023. Today, they did a COMBINDED $450m in volume. The best one did $45m. And many have had months to get going. $IBIT alone is seeing more activity than the entire ’23 Freshman… https://t.co/wV1zQFtPW1
— Eric Balchunas (@EricBalchunas) January 16, 2024
Among the Bitcoin ETFs, BlackRock Inc‘s (NYSE: BLK) iShares Bitcoin Trust ($IBIT) emerged as the clear leader, attracting over $497 million in net inflows over the first three days of trading. This success positions BlackRock’s product as the frontrunner to potentially surpass Grayscale’s Bitcoin Trust (GBTC) as the “Liquidity King,” according to Eric Balchunas.
The substantial inflows into BlackRock’s ETF highlight the institution’s credibility and dominance in the financial markets. According to the iShares official website, the fund held 11,439 Bitcoin worth approximately $500 million as of Wednesday. Currently, Bitcoin is trading at $42,779, indicating a percentage increase of 0.03% in the past day.
While Grayscale’s Bitcoin fund has historically been a dominant force in the crypto investment space, it has experienced substantial outflows totaling more than $579 million since it commenced trading on January 11. Investors seem to be reducing their exposure to GBTC. This trend may be indicative of investors diversifying their portfolios as more options become available in the crypto investment space.
The Evolution of GBTC and the Rise of Spot Bitcoin ETFs
GBTC was once a favored investment vehicle for those seeking exposure to Bitcoin before spot ETFs became available. However, besides the strong legal battle it fought and won, the transition from a closed-end fund to a spot ETF has seen GBTC face challenges, such as persistent discounts.
Investors, initially attracted by the fund’s premium, found themselves facing losses when the premium turned into a discount, trapping them in the fund. With the emergence of spot ETFs, investors are taking advantage of reduced discounts, providing an opportunity to exit their positions.
Overall, the unprecedented success of Bitcoin ETFs in their first three days of trading signals a paradigm shift in traditional finance. The massive trading volume and robust inflows into BlackRock’s iShares Bitcoin Trust demonstrate the growing acceptance of cryptocurrencies as viable financial assets. As the crypto sector matures, investors will closely monitor the success of these ETFs, anticipating additional innovation and integration into the larger financial space.
