The first batch of U.S. spot Bitcoin ETFs got off to a good start on their first day of listing. According to data compiled by Bloomberg, the 11 approved ETF products had a daily trading volume of more than $4.6 billion.
Grayscale Bitcoin Trust, which was converted into an ETF, ranked first with a trading volume of approximately US$2.3 billion, while BlackRock's iShares Bitcoin Trust (IBIT) had a trading volume of more than US$1 billion and Fidelity's FBTC exceeded US$680 million.
Bloomberg analyst Eric Balchunas said that there were 700,000 separate trades that day, twice as many as Invesco QQQ Trust (ticker: QQQ) (QQQ has a larger total trading volume). Balchunas commented: "Retail investors showed much more trading enthusiasm than I expected, which is a good sign."
Grayscale CEO Michael Sonnenshein described it as a "historic day."
“This is absolutely groundbreaking,” said Athanasios Psarofagis, ETF analyst at Bloomberg Intelligence. “There’s no doubt that demand for these ETFs will be strong, but the overall number is impressive.”
Psarofagis added that much of the demand is likely coming from so-called “seed” money that fund issuers have arranged in advance. As more broker-dealers list the funds on their platforms, there may be signs of more organic demand, such as from retail investors or financial advisors. But trading volume does not represent buying or selling or investor inflows, and because of the way funds settle trades, net inflows or outflows from the products may not be known until at least Friday. It also doesn’t sit well with other categories of ETFs. It’s usually the case that only one fund tracking a new asset class starts trading in a day. It’s unprecedented for more than a dozen nearly similar funds to launch at the same time.
The Grayscale Bitcoin Trust (GBTC) is the most traded ETF on record, with nearly $27 billion in assets in its trust structure, which has existed since 2013.
The listing of spot products also pushed the daily trading volume of ProShares Bitcoin Strategy ETF (trading code: BITO) to over $2 billion, a record high. Analysts said: "Maybe some funds are redemptions, but I tend to think that BITO's liquidity will serve market makers for some time."
Where will the new Bitcoin ETF be traded and listed?
There are 11 ETFs listed on the NYSE Arca, Cboe BZX, and Nasdaq exchanges. Here is a list of the ETFs traded on each exchange and their ticker symbols:
NYSE Arca: Grayscale Bitcoin Trust (GBTC), Bitwise Bitcoin ETF (BITB), and Hashdex Bitcoin ETF (DEFI).
Cboe BZX: ARK 21Shares Bitcoin ETF (ARKB), Invesco Galaxy Bitcoin ETF (BTCO), VanEck Bitcoin Trust (HODL), WisdomTree Bitcoin Fund (BTCW), Fidelity Wise Origin Bitcoin Fund (FBTC) and Franklin Bitcoin ETF (EZBC).
Nasdaq: iShares Bitcoin Trust (IBIT) and Valkyrie Bitcoin Fund (BRRR).
Companies such as Robinhood, E*TRADE, Charles Schwab and Fidelity already support spot Bitcoin ETF trading, where users with brokerage accounts are able to purchase spot Bitcoin ETFs. On the Fidelity platform, users attempting to purchase shares are reminded that the investment is subject to a "designated investment agreement" that recognizes that users are experienced investors with a high risk tolerance.
The Vanguard Group, one of the largest fund management companies in the United States, does not support spot Bitcoin ETF transactions for the time being, as the company believes that they are "highly speculative," "unregulated," and do not conform to the company's long-term investment philosophy. Customers who tried to buy BlackRock IBIT were told that the transaction could not be completed. A Vanguard spokesperson said: "Our long-standing view is that the high volatility of cryptocurrencies runs counter to our goal of helping investors generate positive real returns over the long term."
Who will stand the test of time?
Dealers have fought for customers’ attention in a fee war. Bitwise, ARK, WisdomTree are waiving fees for the first six months and/or $1 billion in assets. Invesco will waive fees for the first six months and/or $5 billion in assets. IShares will reduce fees for the first 12 months and/or $5 billion in assets. Valkyrie is waiving fees for the first three months. Fidelity will waive fees through July 31, 2024.
But whether these 11 funds can maintain their long-term momentum remains to be seen.
Cathie Wood, CEO and CIO of Ark Invest, said in an interview with Yahoo Finance that she expects only 3-4 of the 11 spot Bitcoin ETFs to continue operating in 5 years. Ark's ETF will be a product that will stand the test of time for three reasons: mature crypto asset infrastructure and low operating costs; long-term in-depth research in the field of cryptocurrency; and an experienced and tested sales team.
Regarding consolidation, Wood said bluntly: “I don’t think 11 spot Bitcoin ETFs will always exist. Some may close, and some may be integrated into larger companies. The purer companies may be acquired by larger players who need more. I do think that the process of closures and mergers will reduce these products to three, maybe four, but more likely three.”