Key Takeaways
- • U.S.-listed spot bitcoin ETFs traded $4.6 billion in volume by Thursday afternoon on January 11, 2024, according to LSEG data, after the SEC approved the products on Wednesday.
- • Grayscale, BlackRock and Fidelity dominated trading volumes among the eleven newly approved spot bitcoin ETFs.
- • Issuers engaged in a fee war, with fees ranging from 0.2% to 1.5%, and Valkyrie cut its fee to 0.25% after launch with fees waived for three months.
- • Grayscale's converted trust became the world's largest bitcoin ETF with more than $28 billion in assets under management.
- • Analysts' inflow forecasts varied widely, from Bernstein's $10 billion for 2024 to Standard Chartered's $50 billion to $100 billion, while Vanguard declined to offer the products and Goldman Sachs' Sharmin Mossavar-Rahmani dismissed bitcoin as an investable asset class.
Summary
U.S.-listed spot bitcoin exchange-traded funds saw $4.6 billion worth of shares trade as of Thursday afternoon, according to LSEG data, as investors moved into the products after the U.S. Securities and Exchange Commission approved them on Wednesday. Eleven spot bitcoin ETFs, including BlackRock's iShares Bitcoin Trust (IBIT.O), Grayscale Bitcoin Trust (GBTC.P) and ARK 21Shares Bitcoin ETF (ARKB.Z), began trading Thursday morning. Grayscale, BlackRock and Fidelity dominated trading volumes. Todd Rosenbluth, strategist at VettaFi, said trading volumes had been relatively strong for new ETF products but that the contest would extend well beyond a single day.
The approvals followed a decade-long dispute with the crypto industry. The SEC had previously rejected all spot bitcoin ETF applications on investor protection grounds. SEC Chair Gary Gensler said in a statement that the approvals were not an endorsement of bitcoin, which he called a "speculative, volatile asset." Vanguard, the largest provider of mutual funds, said it had no plans to make the new products available to its brokerage clients, and a spokeswoman said the firm would focus on stocks, bonds and cash. Sharmin Mossavar-Rahmani, head of the Investment Strategy Group and chief investment officer of Wealth Management at Goldman Sachs, said at a webinar that cryptocurrencies had no place in an investment portfolio.
Issuers competed aggressively on fees, with some cutting them well below the U.S. ETF industry standard before launch. Fees on the new products range from 0.2% to 1.5%, and many firms offered temporary or volume-based fee waivers. Valkyrie cut its fee a second time to 0.25% after its ETF began trading and waived fees for three months. Grayscale was approved to convert its existing bitcoin trust into an ETF on Thursday, making it the world's largest bitcoin ETF with more than $28 billion in assets under management. Grayscale CEO Michael Sonnenshein said the firm plans to file for a covered call ETF that would let investors generate income from options on its spot bitcoin product.
Forecasts for inflows vary widely. Bernstein analysts estimated flows will build gradually to exceed $10 billion in 2024, while Standard Chartered analysts said the ETFs could draw $50 billion to $100 billion this year. Other analysts have projected $55 billion in inflows over five years. Market participants also watched bid-ask spreads closely, since narrower spreads are generally viewed as more desirable. Jason Stoneberg, director of product strategy at Invesco, whose ETF with Galaxy Digital debuted Thursday, said trading volume, internal plumbing and participant numbers are critical to tightening spreads.
Bitcoin rose to its highest level since December 2021, last up 0.77% at $46,303, while ether was up 2.79% at $2,597.95. Crypto-related equities initially climbed but closed lower, with Riot Platforms and Marathon Digital falling 15.8% and 12.6%, MicroStrategy down 5.2% and Coinbase down 6.7%. Separately, Circle Internet Financial, the issuer of the USDC stablecoin, said it had confidentially filed for a U.S. initial public offering. Some analysts cautioned that the approval euphoria could be premature, given lingering investor wariness after the 2022 collapse of crypto exchange FTX.
The approvals followed a decade-long dispute with the crypto industry. The SEC had previously rejected all spot bitcoin ETF applications on investor protection grounds. SEC Chair Gary Gensler said in a statement that the approvals were not an endorsement of bitcoin, which he called a "speculative, volatile asset." Vanguard, the largest provider of mutual funds, said it had no plans to make the new products available to its brokerage clients, and a spokeswoman said the firm would focus on stocks, bonds and cash. Sharmin Mossavar-Rahmani, head of the Investment Strategy Group and chief investment officer of Wealth Management at Goldman Sachs, said at a webinar that cryptocurrencies had no place in an investment portfolio.
Issuers competed aggressively on fees, with some cutting them well below the U.S. ETF industry standard before launch. Fees on the new products range from 0.2% to 1.5%, and many firms offered temporary or volume-based fee waivers. Valkyrie cut its fee a second time to 0.25% after its ETF began trading and waived fees for three months. Grayscale was approved to convert its existing bitcoin trust into an ETF on Thursday, making it the world's largest bitcoin ETF with more than $28 billion in assets under management. Grayscale CEO Michael Sonnenshein said the firm plans to file for a covered call ETF that would let investors generate income from options on its spot bitcoin product.
Forecasts for inflows vary widely. Bernstein analysts estimated flows will build gradually to exceed $10 billion in 2024, while Standard Chartered analysts said the ETFs could draw $50 billion to $100 billion this year. Other analysts have projected $55 billion in inflows over five years. Market participants also watched bid-ask spreads closely, since narrower spreads are generally viewed as more desirable. Jason Stoneberg, director of product strategy at Invesco, whose ETF with Galaxy Digital debuted Thursday, said trading volume, internal plumbing and participant numbers are critical to tightening spreads.
Bitcoin rose to its highest level since December 2021, last up 0.77% at $46,303, while ether was up 2.79% at $2,597.95. Crypto-related equities initially climbed but closed lower, with Riot Platforms and Marathon Digital falling 15.8% and 12.6%, MicroStrategy down 5.2% and Coinbase down 6.7%. Separately, Circle Internet Financial, the issuer of the USDC stablecoin, said it had confidentially filed for a U.S. initial public offering. Some analysts cautioned that the approval euphoria could be premature, given lingering investor wariness after the 2022 collapse of crypto exchange FTX.
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