The recent surge in Bitcoin exchange-traded funds (ETFs) has caused a significant impact on the financial realm. On January 16, the combined trading volume of 10 spot Bitcoin ETFs surpassed the total volume of all 500 ETFs launched in the United States throughout 2023 by more than threefold.
According to data from Yahoo Finance, these 10 recently approved Bitcoin ETFs collectively generated an impressive total volume exceeding $1.8 billion on that single day. Notably, the major contributors to this volume were funds provided by industry giants Grayscale, BlackRock, and Fidelity, accounting for a substantial $1.6 billion.
In stark contrast, the combined trading volume of all 500 ETFs launched in the U.S. in 2023 amounted to a modest $450 million on the same day, according to Bloomberg ETF analyst Eric Balchunas.
Among the various Bitcoin ETFs, BlackRock’s iShares Bitcoin Trust has emerged as a frontrunner in terms of net inflows, attracting over $497 million over the past three days. In the initial three days of trading, the total volume across all new spot Bitcoin ETF products reached nearly $10 billion, based on figures from Bloomberg ETF analyst James Seyffart and Yahoo Finance data compiled by Cointelegraph.
Despite Grayscale’s Bitcoin fund leading in total trading volume with over $5.1 billion, the fund has experienced significant outflows as investors seek to reduce exposure. Since its trading inception on January 11, the Grayscale Bitcoin Trust (GBTC) has witnessed total outflows surpassing $579 million. Balchunas anticipates that BlackRock’s product will continue to attract the most inflows, positioning it as the “most likely to overtake GBTC as Liquidity King.”
Previously, GBTC presented a lucrative opportunity for investors leveraging borrowed funds to capitalize on Grayscale’s premium, which served as an indicator of Bitcoin demand before the advent of spot ETF products. However, the profitability of this arbitrage trade transformed into substantial losses when the premium shifted unexpectedly to a discount, trapping investors unwilling to sell their Bitcoin at a significant markdown.
Following GBTC’s successful conversion to a spot ETF, the discount has dwindled to as low as 1.55%. Investors who had their Bitcoin locked up for extended periods are now capitalizing on the opportunity to exit. This transformation in the Bitcoin ETF landscape signifies a noteworthy milestone in the evolution of cryptocurrency investment strategies.