Bitcoin, celebrating its 15th anniversary, has made a resounding entry onto Wall Street with the launch of 11 U.S. exchange-traded funds (ETFs) tracking its spot price. These ETFs, commencing trading on January 11 after regulatory approval, garnered significant investor interest, holding a collective 644,860 bitcoins valued at over $27 billion within two trading days, according to data from Glassnode.
A substantial portion of this investment, exceeding 500,000 bitcoins, was previously held in the Grayscale Bitcoin Trust, which transformed from a closed-end fund to one of the newly approved ETFs. CoinShares data reveals total inflows of $4.1 billion into these 11 ETFs since their debut.
Market observers assert that Bitcoin’s entrance into the world’s largest stock market symbolizes the conclusion of its initial maturation phase. The increased liquidity resulting from these developments is anticipated to curb Bitcoin’s historical volatility, marking a transformative shift for the cryptocurrency.
“This is a logical, nearly-inevitable evolution as a newborn security with a wildly uncertain value and price matures into a mainstream asset with a million punters punting,” commented Brent Donnelly, a currency trader and president of Spectra Markets.
While daily trading volumes for Bitcoin on cryptocurrency exchanges average around $500 million, the U.S. spot Bitcoin ETFs recorded an impressive $4.6 billion in volume on their inaugural day. The growing significance of U.S. ETF flows is expected to make the U.S. trading session particularly crucial for Bitcoin’s price action, according to Anders Helseth, Head of Research at K33 Research.
However, caution is advised, as it is too early to determine whether these new Bitcoin investment products will sustain investor interest in the long run. Despite potential fluctuations in trading volumes, the enhanced market liquidity may pave the way for the launch of derivative products betting on Bitcoin’s volatility.
Bitcoin, created by the mysterious Satoshi Nakamoto in 2009, has experienced numerous highs and lows over its 15-year history. The recent 50% surge since mid-October, driven by expectations of ETF approval, prompted profit-taking, resulting in a 16% dip from its peak of $49,033 to $40,267. The cryptocurrency currently remains approximately 40% below its all-time high of $69,000.
As the cryptocurrency landscape evolves, signs suggest that Bitcoin whales—investors holding more than 1,000 bitcoins—may be realizing gains. Data from Glassnode indicates a decline in the total supply of bitcoin held by long-term holders, who have held the cryptocurrency for at least six months. On average, these long-term holders are sitting on a 55% unrealized profit, prompting some to capitalize on their portfolios, notes Aurelie Barthere, an analyst at blockchain data firm Nansen.
