U.S.-listed bitcoin exchange-traded funds (ETFs) saw a remarkable $4.6 billion in shares traded on their first day of trading, as reported by LSEG data on Thursday afternoon. This surge in trading activity followed the approval of these landmark products by the U.S. Securities and Exchange Commission (SEC) on Wednesday.
This development represents a watershed moment for the cryptocurrency industry, testing the broader acceptance of digital assets as investments. Eleven spot bitcoin ETFs, including offerings from BlackRock (NYSE:BLK) such as the iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF, commenced trading, triggering a competitive race for market share.
Grayscale, BlackRock, and Fidelity emerged as dominant players in terms of trading volumes, according to LSEG data.
“Trading volumes have been relatively strong for new ETF products,” noted Todd Rosenbluth, a strategist at VettaFi. However, he cautioned that the true impact of these ETFs would unfold over a more extended period than just a single day’s trading.
SEC Chair Gary Gensler, in a statement, clarified that the approvals were not an endorsement of bitcoin, characterizing it as a “speculative, volatile asset.” Some executives had earlier voiced concerns about bitcoin’s high-risk nature. Vanguard, the largest provider of mutual funds, announced that it had no plans to offer the new batch of spot bitcoin ETFs on its platform to brokerage clients.
Despite the initial excitement around the approval, the broader investment community’s perception of cryptocurrencies as risky remains, with skepticism prevailing.
The regulatory green light ignited intense competition among issuers, prompting some to slash fees below industry standards even before the launch. Fees for the new bitcoin ETFs range from 0.2% to 1.5%, with issuers offering fee waivers for specific periods or asset thresholds.
Grayscale, specifically, was approved to convert its existing bitcoin trust into an ETF, swiftly becoming the world’s largest bitcoin ETF with over $28 billion in assets under management.
Analysts’ estimates for the potential influx of funds into spot bitcoin ETFs vary, with Bernstein predicting gradual flows surpassing $10 billion in 2024. Standard Chartered analysts suggested the possibility of drawing $50 billion to $100 billion this year alone.
As the ETFs began trading, market participants closely monitored bid-ask spreads, emphasizing the importance of trading volume, internal plumbing, and the number of participants involved in determining favorable spreads.
While this development marks a significant milestone for the cryptocurrency industry, some analysts caution that the broader investment community’s skepticism may temper the initial euphoria.
Cryptocurrency-related stocks initially climbed higher but ended the day lower, reflecting persistent wariness among investors. Bitcoin miners Riot Platforms (NASDAQ:RIOT) and Marathon Digital (NASDAQ:MARA) experienced declines, along with Bitcoin investor Microstrategy (NASDAQ:MSTR) and crypto exchange Coinbase (NASDAQ:COIN). The ProShares Bitcoin Strategy ETF, tracking bitcoin futures, posted gains.
Additionally, Circle Internet Financial, the company behind stablecoin USDC, announced a confidential filing for a U.S. initial public offering, potentially signaling continued innovation and development in the cryptocurrency space.