Bitcoin ETFs Shatter Trading Volume Records: Could Eclipse Gold ETFs by Summer

The launch of U.S.-listed spot bitcoin exchange-traded funds (ETFs) has been a game-changer for the cryptocurrency market, and their impact was on full display this week as Bitcoin’s price reached a new all-time high before correcting sharply.

On Tuesday, the ten spot bitcoin ETFs collectively surpassed $10 billion in trading volume, shattering the previous record set just last week.

TLDR

• U.S.-listed spot bitcoin ETFs had their busiest day ever on Tuesday, surpassing $10 billion in trading volume as Bitcoin’s price hit a new all-time high before correcting sharply.
• BlackRock’s IBIT ETF was the fourth most traded among all ETFs, notching over $3.8 billion in volume.
• The high trading volume could indicate heavy profit-taking, with traders selling ETF shares to lock in gains from Bitcoin’s recent rally.
• Fidelity’s Bitcoin ETF (FBTC) saw its strongest daily inflow of $404.6 million on Monday, bringing its total assets to $7.49 billion.
• If Bitcoin ETFs continue to see $10 billion in inflows every month, they could potentially overtake gold ETFs in assets under management by summer 2024.

This milestone coincided with Bitcoin’s momentous rally, which saw the cryptocurrency breach the $69,000 mark for the first time, surpassing its previous all-time high from November 2021.

However, the euphoria was short-lived as profit-taking ensued, leading to a sharp correction that saw Bitcoin’s price tumble by more than 10%.

Eric Balchunas, an ETF analyst at Bloomberg Intelligence, highlighted the significance of this trading volume, noting, “These are bananas numbers for ETFs under 2 months old.”

The spot Bitcoin ETFs started trading on January 11, and their rapid ascent to record-breaking volumes underscores the growing institutional interest in gaining exposure to the world’s largest cryptocurrency.

MILESTONE: the ten Bitcoin ETFs did $10b in volume today, smashing prev record set last Wed.. Volatility and volume go hand in hand with ETFs so not totally surprised. That said these are bananas numbers for ETfs under 2mo old. $IBIT, $FBTC, $BITB, $ARKB all w record days. pic.twitter.com/rIdbhoYifV

— Eric Balchunas (@EricBalchunas) March 5, 2024

Leading the charge was BlackRock’s iShares Bitcoin Trust (IBIT), which was the fourth most traded among all ETFs on Tuesday, notching over $3.8 billion in volume, according to Barchart data. Other top performers included Fidelity’s FBTC, Bitwise’s BITB, and ARKB, co-managed by Ark Invest and 21Shares, all of which broke their personal volume records.

While last week’s heavy bitcoin ETF trading was primarily driven by strong net inflows, with the funds attracting over $1.7 billion in fresh money, Tuesday’s action could indicate a different narrative. Analysts suggest that the record trading volume may have been fueled by heavy profit-taking, with traders either spooked by the heavy volatility or deciding to sell ETF shares to lock in Bitcoin’s 50% price gain over the past month.

Fidelity’s Bitcoin ETF, the Wise Origin Bitcoin Fund (FBTC), has been a standout performer since its inception. On Monday, the fund recorded its largest daily inflow of $404.6 million, bringing its total assets to an impressive $7.49 billion. According to BitMEX Research, Fidelity has now received $5.2 billion of flows since the ETF’s launch, cementing its position as a major player in the burgeoning bitcoin ETF market.

The success of the spot bitcoin ETFs has been nothing short of remarkable, surpassing an aggregate assets under management (AUM) of $50 billion on Tuesday, having started with just under $30 billion, including Grayscale’s stash. New flows into the funds have brought in a net new $7.9 billion, with the rest of their gains coming from Bitcoin’s price appreciation.

Balchunas believes that if these ETFs continue to maintain their current momentum, adding $10 billion in assets per month – a prospect he deems both extraordinary and plausible, depending on Bitcoin’s price trajectory – they could potentially surpass the assets under management of gold ETFs by this summer.

[1/4] Bitcoin ETF Flow – 04 March 2024

All data in. Very strong day with +$562m net flow. Fidelity very strong with a record day

Not the best day for diversity, with smaller players BTCO, HODL & BTCW all having outflows pic.twitter.com/drCrg6EzsN

— BitMEX Research (@BitMEXResearch) March 5, 2024

The comparison to gold ETFs introduces an interesting dynamic, as both Bitcoin and gold have hit new all-time highs, causing some confusion regarding investors’ risk appetite.

While Bitcoin’s surge is partly attributed to increased investment in the newly launched U.S. ETFs, the rise in gold prices may suggest a defensive stance by investors amid worries about geopolitical tensions or potential corrections in global stock markets.

Regardless of the perceived risk appetite, both Bitcoin and gold are seen as potential beneficiaries of anticipated looser monetary policies from the Federal Reserve. Market swaps indicate a 62% probability of an interest-rate reduction in June, up from 58% at the close of February, which could further fuel demand for these alternative assets.

As the cryptocurrency market continues to evolve and gain mainstream acceptance, the success of the spot bitcoin ETFs serves as a testament to the growing institutional interest in digital assets.

The post Bitcoin ETFs Shatter Trading Volume Records: Could Eclipse Gold ETFs by Summer appeared first on Blockonomi.