Bitcoin exchange-traded funds listed in the U.S. are worth $4.6 billion as of Thursday afternoon, as investors pounced on the breakthrough product approved by U.S. securities regulators on Wednesday, according to LSEG data. shares are traded.
These products represent a watershed moment for the cryptocurrency industry, testing whether digital assets, which are still considered risky by many experts, can be widely accepted as investments.
Eleven spot Bitcoin ETFs begin trading Thursday morning, including BlackRock's iShares Bitcoin Trust, Grayscale Bitcoin Trust, ARK 21Shares Bitcoin ETF, and more, amid fierce competition for market share. A competition has begun.
Grayscale, BlackRock and Fidelity accounted for most of the volume, according to LSEG data.
“Volumes for new ETF products are relatively strong,” said Todd Rosenbluth, a strategist at Bettafi. “But this is a longer race than just one day's trading.
After a decade of battles with the crypto industry, the Securities and Exchange Commission finally gave the product the green light late Wednesday.
Some executives have called Bitcoin a high-risk investment, and Vanguard, the largest mutual fund, said it has no plans to make a new spot Bitcoin ETF available to brokerage clients on its platform.
The SEC previously rejected all Bitcoin spot ETFs due to investor protection. SEC Chairman Gary Gensler said in a statement Wednesday that the approval does not endorse Bitcoin, calling it a “speculative and volatile asset.”
With the launch of the ETF, the price of Bitcoin rose to its highest level since December 2021. The price of Bitcoin was last up 0.77% at $46,303, while the price of Ether, the second largest cryptocurrency, was up 2.79% at $2,597.95.
Competition for market share
The regulatory nod has led to fierce competition among issuers for market share, with some downsizing. Fee The company's product was well below U.S. ETF industry standards even before Thursday's launch.
Fees for new Bitcoin ETFs range from 0.2% to 1.5%, and many companies are also offering to waive fees completely for a certain period of time or for a certain amount of assets. After the ETF began trading, Valkyrie lowered the fee again to 0.25% and waived the fee for the first three months.
Grayscale was approved Thursday to convert its existing Bitcoin trust into an ETF, creating overnight the world's largest Bitcoin ETF with more than $28 billion in assets under management.
Estimates of how much profit Spot Bitcoin ETFs can earn vary widely. Analysts at Bernstein expect capital flows to increase gradually, topping $10 billion in 2024, while analysts at Standard Chartered this week said ETFs could rise to around $50 billion this year alone. He said it has the potential to attract $100 billion. Other analysts say it could see an influx of $55 billion over five years.
As the ETF began trading on Thursday, market participants focused on the bid-to-ask spread, or the difference between the price at which a trader could buy an ETF and the price at which it could be sold. ETFs with tighter spreads are generally considered more desirable.
Jason Stoneberg, director of product strategy at Invesco, whose ETF incorporating Galaxy Digital debuted on Thursday, said trading volume, internal plumbing and the number of participants involved were “very difficult to get the spread to a good level.” It’s important.”
Some analysts warned that the euphoria surrounding the approval may be premature. Scandals such as the 2022 cryptocurrency exchange FTX debacle have made investors even more wary, and the broader investment community still views cryptocurrencies as risky.
A Vanguard spokesperson said the company has no plans to launch its own crypto investment products and remains focused on core asset classes such as stocks, bonds, and cash, which it describes as a “balanced He said that he sees it as a “block for long-term investment.” investment portfolio”
Sharmin Mosavar Rahmani, head of Goldman Sachs' investment strategy group and chief investment officer of wealth management, said in a webinar on Thursday that cryptocurrencies have no place in investment portfolios.
“When you think about it, does something like Bitcoin have value?” she said. “We don't think it's an asset class to invest in.”
Still, some hope the product will pave the way for more innovative crypto ETFs, such as SpotEther products.
Grayscale CEO Michael Sonnenschein said in an interview Thursday that the company plans to file for a covered call ETF to allow investors to earn income from options on Bitcoin spot products. He said there was.
