Matteo Greco, Research Analyst at Fineqia International, a listed digital asset and fintech investment firm.
Bitcoin (BTC) ended the week at around $41,600, up slightly 0.4% from the previous week’s closing price of around $41,750. Price volatility has decreased compared to last week, and speculation has come to an end as stability has increased following the SEC’s approval of the ETF.
The introduction of the new BTC spot ETF has led to an influx of funds from traditional finance into the digital asset market. The 11 spot ETFs have attracted a total of $1.15 billion in cumulative inflows since launch. Leading the pack is Blackrock Spot ETF with approximately $1.4 billion in assets under management (AUM), followed by Fidelity Spot ETF with approximately $1.26 billion in AUM.
These inflows were partially offset by the fact that one of the 11 spot ETFs launched was Grayscale Bitcoin Trust (GBTC). GBTC, which is not a new product but a trust transaction, has been converted to ETF since 2015. The product has experienced significant outflows of approximately $2.81 billion since the conversion, while total inflows across the 11 BTC spot ETFs have decreased from approximately $3.96 billion to $1.15 billion.
At the time of conversion, GBTC held approximately 620,000 BTC, which is now down to approximately 552,000 BTC. This strong outflow can be mainly attributed to two factors. First, prior to the conversion, GBTC customers were restricted from share repurchases due to the product structure and could only sell shares on the secondary market. This has forced many clients to hold positions for years without an option to liquidate them, unless they are willing to sell at a significant discount in the secondary market. Second, the high management fees set by Grayscale (1.5%) compared to most of its competitors (0.2%/0.3%) have led some investors to withdraw their investments from Grayscale to cash out their profits or reinvest in more cost-effective ETFs.
The BTC spot ETF experienced robust activity with high trading volume. The cumulative trading volume of 11 spot ETFs reached approximately $16.6 billion in the six days since launch, with a daily average of approximately $2.77 billion. As expected, GBTC recorded the highest trading volume, given the massive amount of BTC held and the dynamic activity associated with the trust’s ETF conversions.
With the successful launch of the BTC spot ETF, market participants and analysts are now turning their attention to the possibility of including various digital assets in the ETF. Analysts predict a greater than 70% chance of an Ethereum (ETH) spot ETF being approved this year. This expectation is further strengthened by analyzing the price movement of ETH. Immediately after the approval of the BTC spot ETF, capital moved from BTC to ETH. ETH rose 17% against BTC and 11% in dollar terms during the approval week, indicating that market participants are anticipating the approval of the ETH spot ETF and adjusting their positions accordingly following the green light for the BTC spot ETF.