Will be easier to get an Ethereum ETF approved now: Ava Labs president
One month after their historic launch, ETF insiders and crypto proponents alike say Bitcoin spot funds are proving an unequivocal success on key trading measures.
Some 21 trading days in, the funds have raked in about US$2.8 billion in total net inflows, data compiled by Bloomberg Intelligence show. That takes into account the $6.4 billion investors yanked from the Grayscale Bitcoin Trust (ticker GBTC) after it was converted from a trust into an exchange-traded fund.
Atop the leaderboard are BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC), taking in around $3.8 billion and $3.1 billion of inflows. Both breached the $1 billion threshold in five days or less. They’re also the only two funds across the ETF universe to attract more than $3 billion in their first 20 days of trading, according to BI.
Expectations were high for the funds since they allow investors to gain exposure to Bitcoin in traditional brokerage accounts instead of through crypto-native startups. After initially appearing as a sell-the-news event, the success of the ETFs has helped to push the price of Bitcoin to a the highest in more than two years.
“Any ETF, regardless of the category, garnering over $100 million in assets in a month is deemed a success,” said Jane Edmondson, head of thematic strategy at TMX VettaFi. “We have most of them over that threshold despite the variance in fee structure. Will they all be economically viable over the long-term? That remains to be seen.”
Outside of the two largest new funds, inflows have been less brisk. The Bitwise Bitcoin ETF (BITB) and ARK 21Shares Bitcoin ETF (ARKB), have hauled in around $786 million and $918 million respectively. The Franklin Bitcoin ETF (EZBC) has attracted only $71 million despite having the lowest fees in the group. The WisdomTree Bitcoin Fund (BTCW) has pulled in $15 million.
Even so, overall “flows into the other ETFs continue to be strong,” wrote Geoffrey Kendrick of Standard Chartered Bank. His year-end prediction for the group is to have at least $50 billion of net inflows, noting that GBTC redemptions will stop at “some point.”
When it comes to volume, the BlackRock and Fidelity funds have each traded over $6 billion shares since their inception — a figure only comparable to the launches of the ProShares Bitcoin Strategy ETF futures fund (BITO) and State Street’s SPDR Gold Shares Class (GLD) ETF, according to Bloomberg data.
Based on the flow and volume metrics, IBIT and FBTC sit squarely among the top 0.1% when it comes to new ETF launches out of about 5,500 that took place over the past 30 years, Bloomberg data show. The dominance of the pair comes as little surprise to industry watchers given the two asset management behemoths have unparalleled marketing and distribution channels as well as brand recognition.
The volume figures underscore the ease of trading assets under an ETF wrapper and why investors have long pushed for Bitcoin funds. The clearest example is Grayscale’s GBTC which, since its long-awaited conversion, has eliminated the fund’s discount, leaving behind an arbitrage trade that over the years has been both a slam-dunk and a heartbreaker for speculators.
While the ETFs are available to the masses, there are still some hold-outs. LPL Financial — a gatekeeper of trillions of dollars in capital — said they still need to be convinced that the ETFs are worthy additions to their massive trading platforms and to ensure that the fund they select will not shutter. Traditional firms like Vanguard Group Inc. is also refusing to offer the new ETFs on its gigantic trading platform.
“Once these ETFs get on various platforms we will see further interest,” said Mohit Bajaj, director of ETFs at WallachBeth Capital. “They’re still new to many investors. Once people feel more comfortable then flows will increase.”