Bitcoin ETFs: What's The Current State Of Play?

ETFs experienced over $800 million of net inflows in their first two days, or almost 19,000 BTC.

What new demand have the ETFs introduced for bitcoin?

After two days of trading, it's still early days for the BTC ETFs. The first lot of data is in, though, and the raw numbers are impressive no matter how you slice it. While these are still subject to updates (TradFi doesn't do real-time information), we can already gain some useful insights from these figures.

We've borrowed a chart helpfully put together by Eric Balchunas, a Bloomberg ETF specialist, who has been tracking the launch.

ETF data
BlackRock is the clear winner so far.

So, what does it tell us?

  1. $800 million in BTC was taken off the market. That's the net inflows, or new money coming into bitcoin.
  2. GBTC has had a rough time. The "net inflow" metric masks the outflows from GBTC, which lost almost half a billion dollars as holders bailed on the fund. GBTC has the highest fees of all the ETFs (1.5%), and traders have been buying discounted GBTC for months with the intention of arbitraging the difference when it was converted to an ETF and the price recovered to the spot price of BTC.
  3. BlackRock is the king, but they had a slow start. BlackRock's IBIT now has almost half a billion dollars of inflows, just ahead of Fidelity's $422 million.
  4. Futures aren't going out of fashion. BITO, the BTC futures ETF, has seen some significant volumes, though very little net change. This is likely due in part to spot ETF providers using it to hedge their positions in between receiving money from investors and converting it to physical BTC.
  5. Four ETFs dominate. Leaving out GBTC, which already held 600,000 BTC, the top four ETFs have seen the lion's share of the action. BlackRock, Fidelity, Bitwise, and Ark together pulled in over $1.15 Billion of the total $1.4 billion inflows.

There is still data to come in, so some of the apparently less-successful ETFs might have fared better than it first seems. However, this still a stellar launch, with an incredible $10+ billion in total trading volumes over two days.

So Why Didn't BTC Price Follow?

Theories abound about why this buying pressure didn't filter through to the spot market. One key reason is that the providers never planned to buy spot: They have established relationships with OTC desks to avoid the enormous slippage that would occur if a billion dollars in market buys was placed.

Moreover, GBTC experienced heavy selling. Because the SEC insisted on cash creation for ETFs, these BTC had to be converted to cash, even if the money was destined for another ETF (one with a lower fee). It is not permitted to move BTC assets directly from one ETF to another, which would have been the case with in-kind creates. This may have caused some unexpected downward pressure on the market if their OTC relationships weren't robust enough.

Overall, though, these are temporary phenomena; the short-term noise in the market.

BlackRock Buys The Dip

Another intriguing idea to emerge over the weekend was that BlackRock might not have purchased all of the BTC they needed as soon as possible. Instead, one commentator suggested that they waited, and bought the dip.

Overall, BlackRock picked up 11,439 BTC. Given the $497.7 million inflows reported, this works out at $43,500 per bitcoin. All told, the total $820 million inflows translate to almost 19,000 BTC.

That's just the beginning. A glance at providers' websites, Twitter, and mainstream TV shows that an aggressive marketing campaign is gearing up—with BlackRock, in particular, targeting the lucrative Boomer demographic.

This is marathon, not a sprint, and the starter pistol has only just been fired.


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