The SEC’s approval of spot Bitcoin ETFs is considered a turning point for the crypto industry.
The spot Bitcoin Exchange-Traded Funds (ETFs) market has experienced an unprecedented start, recording over $4 billion in trading volume on its inaugural day. This surge comes after the US Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs on Wednesday, signaling a shift in regulatory stance and allowing institutional investors to access the leading cryptocurrency like never before.
Record-Breaking Debut for Spot Bitcoin ETF
Thursday’s trading session saw an impressive performance, with Bloomberg’s ETF analyst noting that BlackRock Inc’s (NYSE: BLK) ETF ($IBIT) exceeded $1 billion in volume, surpassing the previous record held by ProShares Bitcoin Strategy ETF ($BITO). The entire group of ETFs collectively achieved a trading volume of $4.3 billion, “easily the biggest Day One splash in ETF history,” says Balchunas.
Fidelity Investments also demonstrated a strong debut, with its ETF recording $628 million on its first trading day. Other ETFs, such as those offered by Valkyrie, WisdomTree, and Hashdex, had relatively lower trading volumes, staying below $10 million during the initial hours of trading.
Unlike the other 10 active ETFs, Grayscale’s spot Bitcoin ETF stands out as it represents a conversion of its flagship GBTC fund.
Analysts, including Balchunas, suggested that Grayscale’s volume was likely driven by selling, while BlackRock and Fidelity experienced fresh capital inflows, given that their ETFs are entirely new instruments. He described the trading volumes as “unreal first-day numbers”, indicating strong market interest and participation.
Re what all these dollars flying around means. For the 10 fresh ETFs volume = buying btc today. Clear cut. But, GBTC volume prob ALL selling and maybe $BITO has some too so likely a lot offsetting going on. Just my take tho, not 100%, we'll know more when flows hit tonight
— Eric Balchunas (@EricBalchunas) January 11, 2024
Market Outlook for Spot Bitcoin ETF
The SEC’s approval of spot Bitcoin ETFs is considered a turning point for the crypto industry. Standard Chartered Bank predicted that these ETFs could bring $50 billion to $100 billion into Bitcoin throughout 2024. Combined with the upcoming halving event, this influx of new capital could potentially propel BTC to $200,000 by the end of 2025.
While many celebrate this development, not all financial institutions are jumping on the ETF bandwagon. Vanguard announced that it would not allow its clients to purchase these ETFs, citing their “highly speculative” and “unregulated” nature, which doesn’t align with the company’s long-term investing philosophy. This decision prompted some users to express dissatisfaction, with reports of investors shifting their accounts from Vanguard to Fidelity in response.
Overall, the successful debut of these ETFs signals a promising future for Bitcoin, contrary to concerns that the approval might lead to a “sell the news” scenario. The approval of spot Bitcoin ETFs may pave the way for a more consistent flow of interest in the crypto space, as even skeptics acknowledge the need to engage with the now-regulated product.
As the market continues to digest this historic event, the spotlight remains on how spot Bitcoin ETFs will shape the future of crypto investments and whether they will indeed bring about the predicted influx of institutional capital into the Bitcoin ecosystem.