U.S. bitcoin ETF approval sees $4.6 billion trading volume on launch day

  • U.S.-listed Bitcoin ETFs experienced a record $4.6 billion in trading volume on their first day.
  • The SEC’s approval of these ETFs signifies a pivotal moment for the integration of digital assets into mainstream investment portfolios.

U.S.-listed Bitcoin exchange-traded funds (ETFs) witnessed a staggering $4.6 billion in trading volume on their first day, as per data from LSEG. This event, occurring on Thursday afternoon, marks a pivotal moment for digital assets, traditionally seen as high-risk, as they venture into the mainstream investment realm.

SEC approval ushers new era

The historic approval of these ETFs by the U.S. Securities and Exchange Commission (SEC) on Wednesday sets the stage for a major test of digital assets’ acceptability in broader investment portfolios. Eleven spot Bitcoin ETFs, including notable names such as BlackRock’s iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF, commenced trading on Thursday morning, igniting a fierce battle for market dominance.

The trading activity was predominantly led by Grayscale, BlackRock, and Fidelity, according to the LSEG data.

Trading volumes have been relatively strong for new ETF products. But this is a longer race than just a single day’s trading.

Todd Rosenbluth, a strategist at VettaFi

Regulatory hurdles and cautions

The SEC’s long-awaited approval on Wednesday came after a decade of negotiations and discussions with the cryptocurrency industry. Despite the enthusiasm, some industry leaders still caution about Bitcoin’s high-risk nature. For instance, Vanguard, a major mutual fund provider, announced it would not offer these new Bitcoin ETFs to its brokerage clients.

Coinciding with the ETF launches, Bitcoin’s price surged to its highest point since December 2021, reaching $46,303, while Ether, the second-largest cryptocurrency, also saw an increase.

Also read: Unlocking bitcoin: A game-changing move in ETF fees

Competitive fee strategies

The race for market share among ETF issuers has led to aggressive competitive strategies, including fee reductions. The fees for these new Bitcoin ETFs range from 0.2% to 1.5%, with some issuers even offering temporary fee waivers. Grayscale, after converting its existing Bitcoin trust into an ETF, emerged as the world’s largest Bitcoin ETF, boasting over $28 billion in assets under management.

Analysts have varied expectations regarding the potential inflow into these ETFs, with estimates ranging from $10 billion by 2024 to as much as $100 billion within this year.

Also read: Bitcoin ETFs greenlit by SEC after a decade-long battle

Monitoring Market Dynamics

As trading commenced, market participants closely monitored bid-ask spreads, a crucial indicator of an ETF’s attractiveness. Jason Stoneberg of Invesco, which also launched an ETF in collaboration with Galaxy Digital, highlighted the importance of trading volume and internal mechanisms in achieving favorable spreads.

However, some analysts caution that the excitement might be premature, citing the broader investment community’s ongoing skepticism towards cryptocurrencies. This wariness was reinforced by incidents like the collapse of the FTX crypto exchange in 2022.

A Vanguard spokesperson reiterated their focus on traditional asset classes like stocks, bonds, and cash, dismissing plans for cryptocurrency-based investment products. Similarly, Sharmin Mossavar-Rahmani of Goldman Sachs Wealth Management questioned the intrinsic value of cryptocurrencies like Bitcoin, doubting their suitability as an investment asset class.

MDU.S. Bitcoin ETFs achieve $4.6B in debut trading volume, marking a significant shift in mainstream cryptocurrency investment.


Flavie Du

Flavie Du was a senior writer at BTW media focused on blockchain and fintech investment. She graduated from King’s College London.

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