BTC sells, but ETFs reap success
The historic launch of spot Bitcoin (BTC) exchange-traded funds (ETFs) in the United States has triggered a sell-off in crypto, but in the ETF industry, the funds have been successful in the first week of trading, analysts agree.
Since the Spot Bitcoin ETF's first day of trading on January 11, Bitcoin has fallen 6.6% from $49,000 to $42,876 at the time of writing, according to CoinGecko data. The biggest drop came mostly in the first two days of trading, and the low for the week was $41,753.
Despite the failure of bitcoin ETFs in the first week of BTC price hikes expected by some prominent investors, the funds themselves have had a successful start so far, according to industry analysts.
Spot Bitcoin ETF volumes go bananas in the first trading days
The first spot Bitcoin ETF in the US was one of the most successful ETF launches in terms of trading volumes, with 10 funds raising a total of $10 billion in the first three days.
According to Bloomberg ETF analyst Eric Balchunas, spot bitcoin ETFs have seen unprecedented activity and volume since their inception. Balchunas in the year He said all 500 ETFs launched in 2023 totaled $450 million, which is 2,100% less than what ETFs did in three days.
“Volume is hard to find. Harder than liquids and certainly harder than assets. Because volume has to be created naturally in the market, it can't really be manipulated. And that gives ETFs staying power,” Balchunas wrote on X.
Most of the trading volume came from the Grayscale Bitcoin Trust ETF (GBTC), accounting for 50% of the total volume of $10 billion in the first three days. According to Yahoo Finance, GBTC has so far traded more than $6.3 billion, handling around $2 billion a day in its first two days of trading.
GBTC saw heavy selling following the ETF's launch, with the fund seeing net inflows of $1.2 billion in the first three days of trading.
GBTC sells 27,000 BTC, but other ETFs buy more
While GBTC has been loading up large amounts of Bitcoin in the early trading days, other places BTC ETFs have been increasing their BTC holdings.
In the four days since its launch, GTBC sold a total of 27,122 BTC, or 4.4% of its initial holdings of 619,200 BTC, Bitcoin investor Capital15C reported on X. At least 40,000 BTC combined.
BlackRock's iShares Bitcoin Trust (IBIT), the second largest Bitcoin ETF by holdings, increased its holdings from 2,621 BTC on January 11 to 25,067 BTC on January 17.
According to the latest data from ETF issuers, the spot ETFs hold a combined 651,819 BTC, or 3.32% of the 19.6 million bitcoins released so far.
What's Next for Spot Bitcoin ETFs?
The launch of spot Bitcoin ETFs in the US is seen by many as a “news sell” moment, with some analysts suggesting that there may be more pressure from the futures market.
“We're not seeing a short-term position adjustment, we're not seeing a long-term trend change. But unwinding the addition of more than 13,000 futures contracts could put some strain on price action in the coming weeks, Jurien Timmer, Fidelity's director of global macro, wrote on X.
Related: Bitcoin Greed Index Downgraded to ‘Neutral' as ETFs Fail to Buy Prices
According to Matthew Siegel, Head of Digital Assets Research at VanEck, the latest short-term correction could be triggered by Bitcoin miners selling coins recently. With the upcoming Bitcoin halving – expected to happen in April 2024 – the introduction of institutions could send Bitcoin to an all-time high after the US presidential election in the fourth quarter of 2024, Sigel told Cointelegraph. And so he said.
“We are pleased to see ETFs trading with such liquidity, tight spreads and minimal discounts to NAVs. We expect institutional investors to accelerate their purchases in the coming quarters as their asset allocation models, including Bitcoin, are released to the market.”
According to Standard Chartered, spot bitcoin ETFs could attract $50 billion to $100 billion in revenue by 2024, with the BTC price likely to reach $200,000 by the end of 2025.
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