The spot Bitcoin ETF saw its first trading session on Thursday, with the most notable story being $4.5 billion in trading volume, suggesting a healthy uptrend.
As day two quickly approaches, we take stock of what we learned yesterday and think about what will happen today.
Strong Volume on Thursday
Spot Bitcoin ETFs were healthy with trading volume of $4.5 billion on Thursday, with volume primarily concentrated in a few ETFs.
Grayscale had the largest trading volume at $2.2 billion, despite its dominance in existing assets under management. BlackRock’s ETFs came in second with $1 billion in trading volume, while Fidelity came in third with $680 million.
A total of five ETFs had trading volumes exceeding $100 million each, and six were falling short. Each of the three ETFs had trading volumes of less than $10 million.
““By all metrics – volume, number of transactions, flow and media coverage – it was a huge success.” said Bloomberg Senior ETF Analyst Eric Balchunas on X. “And that’s despite limited platform availability. Just relax and look at this as a multi-year process.”
A wave of interest in futures-based Bitcoin ETFs followed through ProShares. Bitcoin BTC
-2.54%
The trading volume of the strategic ETF (BITO) has increased significantly.
“$BITO broke its all-time high volume record on this historic day with $2 billion traded. Maybe some of it was redemptions, but we think $BITO’s liquidity will serve the (market) makers’ purposes for some time.” said Balcheon.
Spot Bitcoin ETF Initial Data Inflow
Although trading volumes were available in real time, data on inflows into these funds was less publicly available.
According to BitMEX ResearchPreliminary data shows that some of these funds received at least $400 million in inflows. BlackRock recorded inflows of $111 million and Fidelity recorded inflows of $227 million. However, this data excludes several ETFs and is subject to change.
Balcheon estimated Total inflows to the nine new ETFs, excluding Grayscale and Hashdex, will be approximately $650 million. It’s worth noting that grayscale may see more outflows than inflows, which may reduce the overall number.
JPMorgan on Thursday said these spot Bitcoin ETFs are not expected to bring in significant amounts of new capital. Instead, up to $36 billion could come from existing cryptocurrencies, analysts said.
Coinbase OTC trading surges
One interesting note from Thursday was a significant surge in OTC trading volume on Coinbase, the custody platform for many spot Bitcoin ETFs.
Coinbase recorded $7.7 billion in OTC trading volume, the second-highest on record, according to data from CryptoQuant.
Coinbase has seen a significant increase in Bitcoin OTC trading. Image: CryptoQuant.
“I have received several questions about this data. On-chain TX volume aggregated for Coinbase OTC wallet. “It is difficult to know the exact trading volume, but it appears to be at least close to the highest level of the recent year.” said CryptoQuant CEO Joo Ki-young on X.
What role does retail play?
Spot Bitcoin ETF products are suitable for institutional investors but are also widely available to individual investors.
Balchunas noted: 700,000 individual transactions He said he has an on-site Bitcoin ETF with twice the trading volume of the Invesco QQQ Trust Series 1 ETF. He said this suggests there is a lot more grassroots activity compared to large-scale seed investments than he expected.
Balcheon Added The small transaction size suggests a “retail rush” for the Grayscale Bitcoin Trust.
The ability for retail traders to access these products has been aided by trading apps like Robinhood that focus on young, novice investors. In contrast, Vanguard, a more traditional investment advisor, refuses to add support for spot Bitcoin ETFs and claims it has no plans to support cryptocurrency products.
A stepping stone to more ETF-based products
Once a spot Bitcoin ETF is accepted and traded, the next question is what other products will be built on top of it.
We have already made an offer for such a product. On Thursday, Grayscale filed for a so-called covered call ETF to monetize its GBTC positions.
“The Grayscale Bitcoin Trust Covered Call ETF seeks to provide and deliver current income while participating in the price return of the Grayscale Bitcoin Trust,” according to a Form N-1A filed Thursday afternoon. It is said.
The fund will not invest directly in digital assets, according to the filing.
“So it begins…” said Nate Geraci, president of The ETF Store, in a post about X. “We actively manage our exposure to GBTC and buy/sell call and put options using GBTC as the reference asset. We look forward to seeing all variations of the Spot Bitcoin ETF.”
“The ETF Spaghetti Canon is officially in effect. These huge first-day numbers will inspire all kinds of product variants to hit the wall.” Added Balcheon.
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