NEW YORK, January 11, 2024 – U.S.-listed bitcoin exchange-traded funds (ETFs) saw a robust $4.6 billion in trading volume by Thursday afternoon, according to LSEG data. This surge followed the approval of these landmark products by the U.S. Securities and Exchange Commission (SEC) the previous day.
The launch of these ETFs represents a significant milestone for the cryptocurrency industry, offering a crucial test of whether digital assets, often considered high-risk, can achieve broader investment acceptance. Eleven spot bitcoin ETFs, including offerings from BlackRock (iShares Bitcoin Trust), Grayscale (Grayscale Bitcoin Trust), and ARK 21Shares, began trading on Thursday morning, sparking intense competition for market share.
Grayscale, BlackRock, and Fidelity led the trading volume, according to LSEG data. Todd Rosenbluth, a strategist at VettaFi, commented on the strong initial trading volumes but emphasized that this is just the beginning of a longer-term trend. The SEC's approval came after a decade of debate with the crypto industry.
Despite the green light from the SEC, some executives and institutions, including Vanguard, have expressed reservations about bitcoin as a high-risk investment. Vanguard, for instance, stated it had no plans to offer these new ETFs to its brokerage clients. SEC Chair Gary Gensler acknowledged the approval but reiterated that it was not an endorsement of bitcoin, labeling it as a “speculative, volatile asset.”
The launch of these ETFs pushed bitcoin prices to their highest level since December 2021, with bitcoin trading up 0.77% at $46,303 and ether up 2.79% at $2,597.95.
The ETF approvals have triggered a competitive rush among issuers, with some reducing fees significantly before the launch. Fees for the new ETFs range from 0.2% to 1.5%, with some firms offering fee waivers for initial periods or specific asset volumes. Valkyrie, for example, reduced its fees to 0.25% and offered a three-month fee waiver.
Grayscale’s transition from its existing bitcoin trust to an ETF created the world’s largest bitcoin ETF, boasting over $28 billion in assets. Projections for the potential inflow into these ETFs vary widely, with Bernstein estimating flows could reach $10 billion by 2024, while Standard Chartered predicts $50 billion to $100 billion this year alone.
As trading began, market participants focused on bid-ask spreads, a key indicator of ETF desirability. Jason Stoneberg of Invesco noted that trading volume and market participation are crucial for optimizing these spreads.
Despite the excitement, some analysts remain cautious. The broader investment community still views cryptocurrencies with skepticism, partly due to high-profile failures like the FTX collapse in 2022. Vanguard has confirmed its focus remains on traditional asset classes, while Goldman Sachs' Sharmin Mossavar-Rahmani dismissed cryptocurrencies as unsuitable for investment portfolios.
On the day of the launch, cryptocurrency-related stocks saw initial gains but ended lower, with Riot Platforms and Marathon Digital dropping 15.8% and 12.6% respectively, and Microstrategy and Coinbase falling 5.2% and 6.7%. Meanwhile, the ProShares Bitcoin Strategy ETF, which tracks bitcoin futures, gained 0.44%.
Additionally, Circle Internet Financial, the issuer of the USDC stablecoin, revealed it had confidentially filed for a U.S. IPO.