Bitcoin has regained momentum in recent weeks, climbing to $71,000 for the first time since June, fueled by rate-cut cycles in major economies, significant inflows into spot exchange-traded funds (ETFs), and increasing optimism surrounding a potential Donald Trump victory in the upcoming U.S. elections. Despite this surge, Bitcoin remains 54% below its all-time high of approximately $73,750 set in early March.
For investors looking to capitalize on the Bitcoin rally, several popular ETFs are available, including the BlackRock iShares Bitcoin Trust (IBIT), Grayscale Bitcoin Trust ETF (GBTC), Fidelity Wise Origin Bitcoin Trust (FBTC), ARK 21Shares Bitcoin ETF (ARKB), and Bitwise Bitcoin ETF (BITB).
Global Rate Cut Cycle
Central banks worldwide, including the Federal Reserve and the European Central Bank (ECB), have initiated interest rate cuts to address slowing economic growth.
The Federal Reserve kicked off a new rate-cutting cycle by implementing its first rate reduction since 2020, lowering rates by 50 basis points last month after maintaining them at a 23-year high for 14 consecutive months. The Fed plans two additional 50-bps cuts in its remaining meetings this year, indicating a total of 100 bps in cuts for next year and further reductions in 2026.
Similarly, the ECB enacted its third rate cut of the year in October, reducing the deposit rate by 25 basis points as inflation risks within the European Union have eased more quickly than anticipated.
Surging ETF Inflows
The renewed interest in Bitcoin has led to substantial inflows into ETFs, driven by expectations of reduced borrowing costs and increased demand for speculative assets. According to Bloomberg, U.S. spot Bitcoin ETFs have attracted around $3.3 billion in net inflows this month. CoinShares reported that Bitcoin funds saw inflows of $920 million for the week ending October 25, bringing year-to-date inflows to $25.4 billion. This follows a remarkable week for 11 U.S. spot-based ETFs, which collectively saw over $2.1 billion in net inflows for the week ending October 18.
The “Trump Trade”
Bitcoin is being viewed by some as a “Trump trade,” especially as the Republican presidential nominee, Donald Trump, has openly embraced digital assets during his campaign. Trump has pledged to position the U.S. as the “crypto capital” of the world. Reports indicate that Trump is leading in prediction markets, while polls indicate a close race against Democratic candidate Vice President Kamala Harris.
Overview of Bitcoin ETFs
1. iShares Bitcoin Trust (IBIT)
The iShares Bitcoin Trust aims to reflect Bitcoin’s price performance and allows investors to access Bitcoin through traditional brokerage accounts. It charges an annual fee of 25 basis points and has an asset under management (AUM) of $27.1 billion, with an average daily trading volume of 25 million shares.
2. Grayscale Bitcoin Trust (GBTC)
Grayscale Bitcoin Trust is the largest Bitcoin ETF globally, providing investors exposure to Bitcoin in a security form, thereby avoiding the complexities of direct ownership. It holds actual Bitcoins through Coinbase Custody, has an AUM of $15 billion, and charges 1.50% in annual fees, with an average daily volume of 3 million shares.
3. Fidelity Wise Origin Bitcoin Trust (FBTC)
The Fidelity Wise Origin Bitcoin Trust offers investors price exposure to Bitcoin without direct purchases in various accounts. It has accumulated $12.6 billion in assets, charges 25 basis points in annual fees, and trades about 5 million shares daily.
4. ARK 21Shares Bitcoin ETF (ARKB)
The ARK 21Shares Bitcoin ETF seeks to track Bitcoin’s performance based on the CME CF Bitcoin Reference Rate, with an AUM of $3.3 billion and an expense ratio of 0.21%. It sees an average daily trading volume of about 1.2 million shares.
5. Bitwise Bitcoin ETF (BITB)
With an AUM of $2.7 billion, the Bitwise Bitcoin ETF directly invests in Bitcoin and is readily accessible through brokerage accounts. It has the lowest fees among spot Bitcoin ETFs at 0.20% and an average daily trading volume of 2 million shares.
As the election approaches and global economic policies evolve, the outlook for Bitcoin and related investment products remains optimistic.
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