US-listed Bitcoin exchange-traded funds saw $4.6 billion value of shares trade hands as of Thursday afternoon, in keeping with LSEG data, as investors jumped into the landmark products approved by the US securities regulator on Wednesday.
The products mark a watershed moment for the cryptocurrency industry that may test whether digital assets — still viewed by many professionals as dangerous — 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, amongst 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 brand spanking new ETF products,” said Todd Rosenbluth, strategist at VettaFi. “But this can be a longer race than simply a single day’s trading.
The products mark a watershed moment for the cryptocurrency industry that may test whether digital assets — still viewed as dangerous — can gain broader acceptance as an investment. Getty Images
The green light from the Securities and Exchange Commission for the products finally got here late on Wednesday, following a decade-long tussle with the crypto industry.
Some executives called out Bitcoin as a high-risk investment, and Vanguard – the biggest provider of mutual funds – said it had no plans to make the brand 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 an announcement on Wednesday that the approvals weren’t an endorsement of Bitcoin, calling it a “speculative, volatile asset.”
The ETF launches lifted the value of Bitcoin as much as its highest level since December 2021. It was last up 0.77% at $46,303, while the value of ether, the second-largest cryptocurrency, was up 2.79% at $2597.95.
BlackRock executives ring the opening bell on Thursday as Bitcoin ETFs are launched on the Nasdaq. Getty Images
Race for market share
The regulatory nod sparked intense competition for market share among the many issuers, a few of whom slashed the fees for his or her products well below the US ETF industry’s standard even before Thursday’s launch.
Fees on the brand 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 began trading, Valkyrie cut its fees a second time to 0.25% and waived them for the primary 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 greater than $28 billion in assets under management.
Estimates for the way much spot Bitcoin ETFs could reel in vary widely. Analysts at Bernstein estimated that flows will construct up progressively to cross $10 billion in 2024, while Standard Chartered analysts this week said the ETFs could draw $50 billion to $100 billion this 12 months alone. Other analysts have said inflows could possibly be $55 billion over five years.
Because the ETFs began trading on Thursday, market participants were closely watching bid-ask spreads: the difference between the value for a trader to purchase into an ETF and the value it may possibly be sold. ETFs with narrower spreads are typically viewed as more desirable.
Trading volume, internal plumbing and the variety of participants involved “are critically vital to driving the spreads to a great spot,” said Jason Stoneberg, director of product strategy at Invesco, whose ETF with Galaxy Digital debuted on Thursday.
Some analysts cautioned that the euphoria across the approval could be premature. The broader investment community still views cryptocurrencies as dangerous, with scandals comparable to 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 stays on core asset classes comparable to stocks, bonds and money, which it views “because the blocks of a well-balanced, long-term investment portfolio.”
The green light from the Securities and Exchange Commission for the products finally got here late on Wednesday, following a decade-long tussle with the crypto industry. AP
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 consider it, where is there any value to something like Bitcoin?” she said. “We don’t think it’s an asset class to take a position in.”
Still, some expect the products to pave the way in which for much more modern 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 permit investors to generate income from options on its spot Bitcoin product.
