Bitcoin’s price tumbled to its lowest level on Monday since the Securities and Exchange Commission’s approval of spot bitcoin ETFs on Jan. 10.
The largest cryptocurrency by market capitalization was recently trading below $40,000, a more than 4% drop over the past 24 hours and more than 14% since the SEC approved 11 spot BTC products, according to crypto data provider CoinGecko. Earlier Monday, BTC dropped to roughly $39,600, its lowest since since early December.
This fall in value contrasted to predictions of crypto advocates who viewed spot ETF approvals as a pivotal development for bitcoin, solidifying its place as a large-scale traditional investment.
Despite the cryptocurrency’s falling price, 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 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. At the same time, spot bitcoin ETFs have pulled in billions from investors: more than $3 billion as of Thursday, Jan. 18.
Low Fees
Low fees explain the draw from investors, with Bloomberg data revealing that the iShares Bitcoin Trust (IBIT) received $371 million from investors last Wednesday, closely followed by the Fidelity Wise Origin Bitcoin Fund (FBTC), witnessing a record $358 million inflows, the largest single-day amount since its inception last week.
BlackRock and Fidelity together have garnered 68% of the total inflows into the nine new ETFs in the market, amounting to nearly $2 billion.
Still, the launch of the investment vehicles appear in their early days to be a rousing success. The funds’ total market capitalization climbed to $3.25 billion, surpassing silver to become the second largest commodity ETF in the U.S. IBIT led the group, pulling in $1.23 billion since Jan. 11, while FBTC has grabbed $1.07 billion. The lowest fee spot bitcoin ETF, the Bitwise Bitcoin ETF (BITB), brought in $393.8 million, the third-most.