Benzinga - The debut of spot Bitcoin (CRYPTO: BTC) exchange-traded funds in the market has captured the attention of investors with trading volumes soaring to approximately $10 billion in the first three days.
What Happened: Grayscale Investments witnessed its Bitcoin Trust ETF (now GBTC after its ETF conversion) achieve about 25 million shares traded on Tuesday—translating to approximately $970 million—according to data analyzed from Yahoo Finance. This follows an initial flurry of trading that saw $2.3 billion on Thursday and $1.8 billion on Friday.
Senior Bloomberg ETF analyst Eric Balchunas said, “Let me put into context how insane $10b in volume is in first 3 days. There were 500 ETFs launched in 2023. Today, they did a COMBINED $450m in volume. The best one did $45m. And many have had months to get going. $IBIT alone is seeing more activity than the entire ’23 Freshman Class’.”
Let me put into context how insane $10b in volume is in first 3 days. There were 500 ETFs launched in 2023. Today, they did a COMBINDED $450m in volume. The best one did $45m. And many have had months to get going. $IBIT alone is seeing more activity than the entire '23 Freshman… https://t.co/wV1zQFtPW1— Eric Balchunas (@EricBalchunas) January 16, 2024
Meanwhile, BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC) experienced significant trading volumes. IBIT posted nearly 15 million shares traded, equaling around $370 million, and Fidelity saw 8.2 million shares, roughly equating to $310 million traded on Tuesday alone.
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Why It Matters: Balchunas said in a tweet that BlackRock's IBIT is on track to potentially dethrone GBTC as the "liquidity king."
Update on the #Bitcoin ETF Cointucky Derby. The ETFs have traded almost $10 billion total over 3 days. Will have updated flows and assets later tonight or tomorrow morning. pic.twitter.com/OnpCshjYJP— James Seyffart (@JSeyff) January 16, 2024
Liquidity, indicated by close bid-ask spreads and the ability to execute large trades with minimal market impact, remains a key metric for investors selecting a spot bitcoin ETF.
Ark Invest's BTC ETF, along with a Bitwise-managed fund, logged Tuesday trading volumes of about $124 million and $52 million, respectively. Other funds, including those from Invesco, VanEck, Franklin Templeton, Valkyrie, and WisdomTree, saw volumes of $10 million or less each.
Spot ETFs stand out from their futures counterparts. While futures ETFs deal in contracts that speculate on the future price of Bitcoin, spot ETFs involve direct purchase and storage of the actual cryptocurrency for clients.
Image via Shutterstock
Price Action: At the time of writing, BTC was trading at $42,854 up 0.15% in the last 24 hours, according to Benzinga Pro.
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