Original author: Carol, PANews
BlockRock, the world's largest asset management company, submitted an application for a Bitcoin spot ETF to the SEC on June 15. Although the SEC will respond to the review as early as September 2 (related reading: "PA Illustrations | A quick look at the key time nodes for the review of Bitcoin spot ETF applications"), considering BlackRock's global position in the asset management industry, this news is still considered an important signal, indicating that Bitcoin and other cryptocurrencies may be adopted by more institutions. In addition, well-known institutions that have recently submitted Bitcoin spot ETF applications to the SEC include Fidelity, WisdomTree, VanEck, Invesco Galaxy, etc. As more and more institutions express their willingness to join the market, the market is confident that more compliant crypto investment products will be welcomed.
What can the entry of institutions bring to the crypto market? To this end, PAData, a data news column under PANews, analyzed the trading of Bitcoin spot ETFs, futures ETFs and trust funds that have been listed, and found that:
The total holdings of the three funds, BTCC.U, BTCE and GBTC, are approximately 675,600 BTC (equivalent to $20.27 billion). Since June, the total increase has been 9,292 BTC, and the overall growth trend is good.
The total assets managed by the five major Bitcoin futures ETFs, BITO, XBTF, BTF, BITS and DEFI, have reached $1.295 billion. BITO is the only futures ETF that is fully configured with CME futures contracts. Other futures ETFs also configure a certain proportion of other assets, such as US Treasury bonds.
In the past month, BITS has the highest yield, reaching 33.20%, while others are only around 12%. So far this year, BITS still has the highest yield, reaching 137.65%, while others are around 74%. The yield performance is better than spot ETFs and trust funds.
In the week after BlackRock’s application for a Bitcoin spot ETF was announced, the Bitcoin spot price rose by 2.78% on average per day, the largest daily increase caused by the news within the statistical range. Previously, the highest daily increase caused by the news was the 1.56% daily increase caused by the VanEck futures ETF application in the same month.
The impact of institutional ETF application and listing news on Bitcoin spot prices may come from three aspects. First, the reputation endorsement of the institution itself; second, the type of ETF applied for. The application news of spot ETFs will bring greater increases; third, the price trend of Bitcoin when the news occurs. If the application and listing news occurs during the upward trend of Bitcoin, then it will usually bring a certain degree of price increase. If it occurs during the downward trend, then these news usually cannot reverse the market.
Bitcoin spot ETF holdings increased by 5,640 BTC, Grayscale GBTC OTC premium rate rebounded
Purpose Investment, a Canadian investment management company, launched the world's first Bitcoin spot ETF in February 2021. The official website currently shows that the ETF includes 4 trading products, namely BTCC (purchased with Canadian dollars and hedged against US dollar risks), BTCC.B (purchased with Canadian dollars, not hedged against US dollar risks), BTCC.U (purchased with US dollars, allowing investors to hold Bitcoin in US dollars), and BTCC.J (carbon neutral). Investors can purchase these ETFs on the Toronto Stock Exchange, and their shares correspond to physically settled Bitcoin. It is a user-friendly, low-risk cryptocurrency trading method, and ordinary users in the United States cannot purchase this ETF. Another product that is somewhat similar to spot ETFs is a closed-end trust fund, which also corresponds to physical Bitcoin, such as GBTC issued by GrayScale in the United States for qualified investors to purchase. As well as BTCE issued by Germany's ETC Group, BTCE can currently be traded on two exchanges, Deutsche Börse XETRA (a trading venue operated by the Frankfurt Stock Exchange) and SIX Swiss Stock Exchange (Swiss Stock Exchange).
Since many data service websites only provide the holdings of BTCC.U, only BTCC.U in the Purpose spot ETF is incompletely counted here. Judging from the number of bitcoins held by BTCC.U, BTCE and GBTC, as of July 18, the total holdings of the three funds were approximately 675,600 BTC. Based on the recent price of Bitcoin at $30,000, it is equivalent to $20.27 billion. Among them, GBTC has the largest scale, holding 625,200 BTC, and BTCC.U and BTCE hold about 200,000 BTC. Judging from the changes in holdings, the holdings of the three funds have increased by a total of 9,292 BTC since June, with an overall good growth trend. Only GBTC's holdings have slightly decreased by 0.25%, while BTCC.U and BTCE's holdings have increased by 24.83% and 31.07%, respectively.
However, trust funds have no redemption plan, similar to "paper gold", so the price often has a significant price difference from its net asset value, but spot ETFs allow market makers to make markets, and if there is sufficient liquidity, the price usually does not appear at a premium or discount. This difference is fully reflected in the yield performance of the three funds.
As of July 18, the average return of BTCC.U this month is about 6.76%, and the average monthly return this year is about 8.84%, which is significantly better than BTCE and GBTC. The average returns of the latter two this month are -5.27% and -26.39%, respectively, and the average monthly returns this year are -5.85% and -38.18%, respectively, both of which are in a loss state, but the loss margin is shrinking.
Although BTCC.U has better performance in terms of returns, its trading volume is not the highest. As of July 18, BTCC.U's average daily trading volume this month was only 99,500 shares, and BTCC's average daily trading volume this month was about 221,700 shares, totaling 321,200 shares, higher than the average 154,000 shares of BTCE in the same period, but lower than the average 3.926 million shares of GBTC in the same period.
However, it is worth noting that as more institutional applications were announced in June and BTC prices steadily recovered, the average daily trading volume of these four funds in June increased month-on-month, with BTCC.U up 74.89% month-on-month, BTCC up 47.27% month-on-month, BTCE up 23.66% month-on-month, and GBTC up 112.67% month-on-month. So far this month, the average daily trading volume of BTCC.U, BTCC and GBTC has maintained its growth momentum.
The total assets of the top five Bitcoin futures ETFs are nearly $1.3 billion, and their returns have exceeded 70% so far this year.
Although there are no Bitcoin spot ETFs listed in the United States, there are already some futures ETFs listed in the United States. As of July 18, the total assets managed by the five major Bitcoin futures ETFs, BITO, XBTF, BTF, BITS and DEFI, have reached US$1.295 billion. Among them, BITO, officially issued by ProShares in October 2021, is the largest futures ETF within the statistical scope, with total assets reaching US$1.199 billion. Secondly, XBTF and BTF issued by VanEck and Valkyrie are also relatively large in scale, with total assets of more than US$30 million and US$40 million, respectively.
The targets tracked by these Bitcoin futures ETFs are usually mainly Bitcoin futures contracts of the Chicago Mercantile Exchange (CME). Among them, the largest BITO is the only futures ETF that is fully configured with CME futures contracts and implements a "rolling" futures contract strategy. In addition, other futures ETFs are configured with a certain proportion of other assets on the basis of CME futures contracts, such as XBTF and BTF are configured with US Treasury bonds, BITS is configured with blockchain ETFs issued by other institutions, and DEFI is configured with cash.
Judging from the recent net capital flow, BITO has the largest net inflow. In the past month, BITO has a net inflow of $259 million. Secondly, BTF and BITS have also had a small amount of net inflows in the past month, about $1.35 million and $790,000, respectively. If the time period is extended to this year, the 5 Bitcoin futures ETFs within the observation range have all had net inflows of funds, and BITO still has the highest net inflow, about $333 million. Secondly, XBTF has a net inflow of $6.58 million this year, and the net inflows of other ETFs this year are relatively small.
BITO also has the highest average daily trading volume among the five Bitcoin futures ETFs, about 9.9691 million shares, which is 153.93% higher than the average daily trading volume of GBTC this month. However, the trading volumes of other futures ETFs are not high, with BTF about 383,800 shares, XBTF about 17,800 shares, and the remaining two less than 10,000 shares.
Overall, BITO is far ahead of other Bitcoin futures ETFs in terms of fund size, capital inflow and average daily trading volume, but in terms of returns, BITO is not ahead.
According to statistics, the highest yield in the past month is BITS, reaching 33.20%, while the yields of other ETFs in the observation range are only around 12%. Even if the time period is extended to this year, the highest yield is still BITS, reaching 137.65%, while the yields of other ETFs in the observation range are around 74%.
It is reasonable to speculate that the yield of futures ETFs is closely related to the asset exposure they configure. In addition to configuring Bitcoin futures contracts, BITS, which has the highest yield, also configures another blockchain ETF, which points to a wider range of crypto assets, not just Bitcoin. This may have brought higher returns to BITS. But overall, the performance of Bitcoin futures ETFs is much better than that of spot ETFs and trust funds.
The impact of ETF news on BTC prices varies. The recent rise in BTC prices may also be related to on-chain fundamentals.
There is no doubt that the entry of institutions can bring abundant funds to the crypto market, so the news about the application and issuance of ETFs by institutions can always drive the changes in the spot price of Bitcoin. Although the impact of the news is not the only reason, it is at least one of the reasons. So how big is this impact?
Based on publicly reported data, PAData has counted the changes in Bitcoin spot prices within a certain time frame after some ETF applications and listing news. If the public data can get a specific date after cross-validation, the price changes within a week after the news date are counted. Usually, the listing news about futures ETFs can be specific to the date; if the public data can only get a specific month after cross-validation, the price changes in the month of the news are counted. Usually, there is a certain ambiguity about the time of ETF application. In order to compare on the same scale as much as possible, PAData calculated the average daily change of Bitcoin prices within a certain time frame, calculating the average value based on 7 days a week and 30 days a month.
According to statistics, within one week after the announcement of BlackRock's application for a Bitcoin spot ETF, the spot price of Bitcoin rose by 19.49%, equivalent to an average daily increase of 2.78%, which is the largest average daily increase brought by the news within the statistical range. It can be seen that the market is looking forward to the entry of leading institutions.
Secondly, during GBTC’s rapid growth period (October to December 2020), the spot price of Bitcoin rose by 168.21%, equivalent to an average daily increase of 1.87%, but within one week after GBTC was listed, the spot price of Bitcoin only rose by an average daily increase of 0.42%.
Other news-driven daily increases include the 1.56% daily increase in the month when VanEck futures ETF was applied for, the 1.33% daily increase in the month when Jacobi spot ETF was approved, and the 1% daily increase in the month when Fidelity/Wise Origin and SkyBridge Capital spot ETFs were applied for. In addition, there are some news that did not drive the price of Bitcoin up. For example, the spot price of Bitcoin fell by 1.15% on the day when the Valkyrie spot ETF application was reported.
In general, the impact of institutional ETF application and listing news on Bitcoin spot prices may come from three aspects. First, the reputation of the institution itself. For example, institutions of the size of BlackRock can stimulate market confidence. Second, the type of ETF applied for. Spot ETFs face greater regulatory pressure, and there is currently no one that can be approved and listed in the United States. Therefore, in the past, the general situation was that the application news of spot ETFs brought a greater increase. Third, the price trend of Bitcoin when the news occurred. PAData takes the Bitcoin price at the time of the news as the midpoint, and expands it for half a year before and after to observe the Bitcoin price trend at that time. Under this rough observation, it can still be found that if the application and listing news occurs in the upward trend of Bitcoin, it usually brings a certain degree of price increase. If it occurs in the downward trend, then these news usually cannot reverse the market.
Therefore, it is difficult to attribute the recent rise in Bitcoin prices to one factor. In addition to the good news brought by BlackRock, it is important to note that the number of Bitcoin on-chain transactions has also hit a record high recently due to the rise of BRC-20 tokens. On July 18, the number of Bitcoin on-chain transactions reached 582,500, an increase of 210.83% from 187,400 at the beginning of the year. From the trend point of view, after May, the number of on-chain transactions has been above 400,000 most of the time, and it is not uncommon to exceed 500,000. The number of on-chain transactions is a direct reflection of the application of Bitcoin. Generally speaking, an increase in the number of on-chain transactions means that the fundamentals of transactions have improved, and prices are likely to rise.
The impact of news is complex. Whether it is spot or futures, how much money and confidence the Bitcoin ETF can bring to the market depends on many factors. However, the application and approval of ETFs are inseparable from the development of the entire market. The two should be complementary and interrelated systems. The analysis in this article only hopes to review the issued Bitcoin ETFs and observe the impact of news to provide a basis for future analysis. On this basis, PAData will continue to pay attention to the trading of Bitcoin ETFs.
