Mateo Greco, Research Analyst, Listed Digital Assets and FinTech Investment Business Finekia International
Bitcoin (BTC) ended the week at around $41,600, down just 0.4% from the previous week's closing price of around $41,750. Prices have become less volatile and more stable following the SEC's approval of the ETF compared to the previous week, putting an end to speculation on the issue.
The introduction of the new BTC Spot ETF has attracted funds from traditional finance to the digital asset market. The 11 spot ETFs have collectively attracted approximately $1.15 billion in cumulative inflows since inception. Leading the pack is the BlackRock Spot ETF with about $1.4 billion in assets under management (AUM), followed closely by the Fidelity Spot ETF with about $1.26 billion in assets under management.
This inflow was partially offset by the fact that one of the 11 spot ETFs launched was Grayscale Bitcoin Trust (GBTC). GBTC is not a new product; it has been traded in trust since 2015, but was converted to an ETF. The product has experienced significant outflows of approximately $2.81 billion since the conversion, with total inflows for the 11BTC Spot ETF decreasing from approximately $3.96 billion to $1.15 billion.
At the time of the conversion, GBTC held approximately 620,000 BTC, which has now decreased to approximately 552,000 BTC. The large outflow can be attributed to two main factors. First, prior to the conversion, due to the structure of the product, GBTC customers were restricted from redeeming their shares and could only sell them on the secondary market. This forced many customers to hold positions for years without an exit option unless they were willing to sell at a deep discount on the secondary market. Second, the high management fee charged by Grayscale (1.5%) compared to most of its competitors (0.2%/0.3%) has led some investors to choose between cashing out their profits or offering a more cost-effective option. I withdrew my investment from Grayscale to reinvest in a high-performing ETF.
BTC spot ETFs recorded strong activity with high trading volumes. Since their launch, the cumulative trading volume of the 11 spot ETFs has reached approximately $16.6 billion in six trading days, or an average daily trading volume of approximately $2.77 billion. As expected, GBTC recorded the highest trading volume given the large amount of BTC being stored and the dynamic activity related to the conversion of trusts into ETFs.
With the successful launch of the BTC Spot ETF, market participants and analysts are now focusing on the potential for the ETF to include a variety of digital assets. Analysts predict an Ethereum (ETH) spot ETF has a greater than 70% chance of approval this year. This expectation is reinforced by analyzing the price trend of ETH. Immediately after the approval of the BTC Spot ETF, funds were transferred from BTC to ETH. ETH rose 17% versus BTC and 11% in dollar terms during the week of approval. This indicates that market participants are anticipating the approval of the ETH Spot ETF following the green light for the BTC Spot ETF and are adjusting their positions accordingly.
Source: the-blockchain.com
