Newly-minted spot bitcoin ETFs pulled in $3.33 billion in their first five days of trading, as investors enthusiastically embraced the funds after more than a decade of approval delays from regulators concerned about cryptocurrency’s vulnerability to fraud.
At the same time, the funds largely declined over the past 5 days in tandem with the price of bitcoin. Over the same period, broad market exchange traded funds such as the SPDR S&P 500 ETF Trust (SPY) jumped in price.
The biggest spot bitcoin exchange-traded fund, the Grayscale Bitcoin Trust (GBTC), struggled. The fund, which came to market as a $28.6 billion trust, lost $5.5 billion, or 19% of its value, according to Bloomberg data, likely due to fees that are the highest among the 11 spot bitcoin funds approved Jan. 11.
BlackRock, Grayscale, Fidelity
Still, the launch of the investment vehicles appear in their early days to be a rousing success. The funds’ total market capitalization, excluding the Grayscale fund, climbed to $3.25 billion, surpassing silver to become the second largest commodity ETF in the U.S. The iShares Bitcoin Trust (IBIT) led the group, pulling in $1.2 billion since Jan. 11, while the Fidelity Wise Origin Bitcoin Fund (FBTC) has grabbed $1.06 billion. The Bitwise Bitcoin ETF (BITB) brought in $393.8 million, the third-most.
Name recognition helped BlackRock, the world’s biggest ETF issuer, as well as Fidelity, grab the most investor money, etf.com senior analyst Sumit Roy said. Bitwise, a far smaller and lesser-known issuer, has performed well with its BITB fund due to a decision to go to market as a low-fee fund, he said.
“At nearly $400 million, BITB is punching well above its weight thanks to its category-low expense ratio,” he said. “On the other hand, the inflows for the ETFs from VanEck and WisdomTree have been a disappointment.”
Roy noted that by comparison, precious metals ETFs, commodity funds which have been around for decades, had $120 million in outflows over the same period.
While the SEC has allowed ETFs that track bitcoin futures since 2021, it only approved the investment vehicles that give investors exposure to physically backed bitcoin last week after months of anticipation from eager cryptocurrency investors.
The funds are seeing massive inflows despite a number of major asset manager, including Vanguard, refusing to let investors trade the funds with them. During etf.com’s spot bitcoin ETF webinar, chief investment officer of Bitwise Matt Hougan said he wasn’t surprised, but expected the ETFs to be more widely adopted by traditional finance platforms soon.
“I would be surprised if there will be firms still holding out after a year because these businesses are responsive to their customers, and people are already clamoring to request access to trade bitcoin ETFs,” he said.
Contact Lucy Brewster at lucy.brewster@etf.com.