U.S. listed Bitcoin exchange-traded funds (ETFs) recorded a staggering $4.6 billion in trading volume on their first day, as per LSEG data released on Thursday. The products, approved by the U.S. Securities and Exchange Commission (SEC) just a day earlier, have set the stage for a fierce market share battle among major players.
Leading the charge in trading volumes were industry giants Grayscale, BlackRock, and Fidelity, according to LSEG data. The debut of eleven spot Bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF, marked a significant moment for the industry, testing the acceptance of digital assets as mainstream investments.
Despite initial success, some industry executives labeled Bitcoin as a high-risk investment. Vanguard, the largest mutual fund provider, announced it had no plans to offer the new batch of spot Bitcoin ETFs to its brokerage clients, emphasizing concerns about the volatile nature of cryptocurrencies.
SEC Chair Gary Gensler, while giving the green light to the products, emphasized that the approval should not be construed as an endorsement of Bitcoin, calling it a “speculative, volatile asset.”
The regulatory approval ignited intense competition among issuers, with fees for the new Bitcoin ETFs ranging from 0.2% to 1.5%. Some firms went further by waiving fees entirely for an initial period or specific asset volume. Valkyrie, for instance, slashed its fees to 0.25% and waived them for the first three months after its ETF started trading.
Grayscale, already a major player, received approval to convert its existing Bitcoin trust into an ETF, instantly creating the world’s largest Bitcoin ETF with over $28 billion in assets under management.
Estimates on the potential inflow of funds into spot Bitcoin ETFs varied widely. While Bernstein projected gradual growth to surpass $10 billion in 2024, Standard Chartered analysts suggested the ETFs could attract $50 billion to $100 billion this year alone.
As trading commenced, bid-ask spreads became a focal point for market participants, with narrower spreads generally considered more desirable. Analysts cautioned against premature euphoria, citing the broader investment community’s skepticism towards cryptocurrencies.
News report continues below
Despite varied opinions, some anticipate the ETFs to pave the way for innovative crypto products, including spot ether ETFs. Grayscale CEO Michael Sonnenshein revealed plans to file for a covered call ETF to allow investors to generate income from options on its spot Bitcoin product.
In the aftermath of the ETF launches, cryptocurrency-related stocks initially surged but ended the day lower. Bitcoin miners Riot Platforms and Marathon Digital experienced significant declines, while ProShares Bitcoin Strategy ETF, tracking Bitcoin futures, saw a modest gain
In a related development, Circle Internet Financial, the company behind stablecoin USDC, announced the confidential filing of a U.S. initial public offering on Thursday. Circle controls the issuance and governance of USDC, a cryptocurrency pegged to the U.S. dollar.
