A notable milestone was reached in the realm of cryptocurrency investment as the Bitcoin exchange-traded fund (ETF) witnessed its highest single-day net inflow to date. The influx, totaling approximately $1.05 billion on March 11, marked a substantial uptick of around 56% from the $673 million recorded on Feb. 28. This surge in investment into Bitcoin ETFs is attributed to their consistent performance, surpassing the pace of newly mined Bitcoin supply.
Clive Thompson, a seasoned figure in wealth management and former managing director of Swiss Private Banking, shed light on this phenomenon in a recent LinkedIn post. Thompson noted the acquisition of roughly 7200 Bitcoins by new Bitcoin ETFs on March 11, a figure notably divergent from the average daily mined supply of 900 Bitcoins. This disparity in demand versus new supply led to a notable 5% surge in Bitcoin prices, as outlined by Thompson.
The dynamics of the market were further nuanced by the actions of Genesis Holdings, which commenced liquidating its GBTC shares following its bankruptcy. Thompson indicated that these sales, initiated on Feb. 28, seemingly concluded around March 13. This conclusion of Genesis’s GBTC share sales holds significant implications for Bitcoin’s price trajectory, with anticipation for potential surges to new highs, subsequently driving further inflows into Bitcoin ETFs.
Offering insights into the robust trading volumes within the Bitcoin ETF market, senior ETF analyst Eric Balchunas highlighted a standout day on March 12. The market witnessed its second-highest trading volume day for the ten spot Bitcoin ETFs, with a total volume of $8.5 billion, marking the most substantial activity in the past five weeks. Notably, BlackRock’s spot Bitcoin ETF, IBIT, exhibited exceptional activity, doubling the trading volume of SPDR Gold Shares ETF (GLD). Additionally, ETFs such as VanEck’s HODL and Invesco Galaxy’s BTCO saw significant trading volumes of $150 million and $250 million, respectively.
The success of IBIT has spurred heightened interest in Bitcoin ETFs, prompting BlackRock, under the leadership of Larry Fink, to pursue regulatory approval to expand its cryptocurrency offerings. Proposals include additional spot Bitcoin ETFs and integration into its Global Allocation Fund, alongside efforts to tap into emerging markets in Latin America through the launch of iShares Bitcoin Trust ETF’s Depositary Receipts in Brazil.
Nevertheless, the path for new cryptocurrency ETFs, including those for Ethereum (ETH), faces regulatory hurdles. The Securities and Exchange Commission’s (SEC) delay in approving or denying these filings until May has spurred conjecture among experts regarding the likelihood of approval. The absence of direct communication between the SEC and ETF issuers, such as BlackRock, is identified as a contributing factor to this uncertainty. Despite these challenges, anticipation looms for forthcoming engagements that could potentially sway the SEC’s stance on these innovative financial products.
