More cash inflow is expected to enter the Bitcoin market in the near term as more investors in the United States allocate their portfolios to various spot Bitcoin ETFs.
The first three days of trading spot Bitcoin exchange-traded funds (ETFs) in the United States have significantly outshined past ETF success stories. According to the aggregate market data, the total trading volume of the dozen spot Bitcoin ETFs accrued to about $9.6 billion in the first three days. To put the figures into context, there were 500 ETFs launched in the United States in 2023, but they only accumulated a total trading volume of about $450 million, with the best only managing $45 million.
According to senior ETF analyst at Bloomberg Eric Balchunas, it is hard for ETFs to amass significant volume in the early stages similar to the spot Bitcoin ETFs. Ideally, Balchunas indicated that it is difficult for ETFs to record higher volume than cash inflows. Furthermore, ETF volume often indicates the demand from the natural market.
“It is HARD to get volume. Harder than flows even and def harder than assets. Because volume has to form naturally in the marketplace, can’t really be faked. And it gives an ETF staying power,” Balchunas added.
Liquidity Wins among Spot Bitcoin ETF Providers
According to the latest spot ETF market data, the Grayscale Bitcoin Trust (GBTC), BlackRock Inc.’s (NYSE: BLK) iShares Bitcoin Trust (IBIT), and Fidelity Wise Origin Bitcoin Fund (FBTC) topped more than 90 percent of the total trading volume in the first three days. Notably, the GBTC spot ETF registered a three-day trading volume of about $5.1 billion, while IBIT and FBTC recorded a trading volume of around $1.99 billion and $1.46 billion respectively. Undeniably, the three fund managers command a deep liquidity and connection among wealth managers.
Update on the #Bitcoin ETF Cointucky Derby. The ETFs have traded almost $10 billion total over 3 days. Will have updated flows and assets later tonight or tomorrow morning. pic.twitter.com/OnpCshjYJP
— James Seyffart (@JSeyff) January 16, 2024
From the liquidity standpoint, BlackRock stands a decent chance of winning the spot ETF race in the coming quarters. Moreover, the firm led by CEO Larry Fink is well connected with wealth managers and focused on cryptocurrencies as a new asset class. According to the iShares official website, the fund has about 11,439 Bitcoins in its holding worth about $500 million as of Wednesday.
Market Picture
The high demand for Bitcoin triggered by the approval of spot BTC ETFs in the United States will fuel the macro bullish outlook. Combined with the upcoming Bitcoin halving in April this year, the bullish breakout in the next 24 months is expected to return huge profits compared to other asset classes. Moreover, Bitcoin and the altcoin market are leading in the global financial revolution through the web3 space.
As a result, the cryptocurrency industry could easily surpass the precious metal industry in market capitalization in the coming years. The fact that El Salvador has demonstrated that it is possible to repay national debts through Bitcoin, more countries will follow the same past in the near future.
