By Matteo Greco, Research Analyst at the Listed Digital Assets and Fintech Investment Sector Fineqia International
Bitcoin (BTC) closed the week at around $41,600, down a slight 0.4% from the previous week’s closing value of around $41,750. The price showed reduced volatility compared to previous weeks and found greater stability following the SEC’s approval of the ETFs, putting an end to speculation about it.
The introduction of the new BTC Spot ETFs attracted funds from the traditional financial world to the digital asset market. The eleven Spot ETFs have collectively attracted approximately $1.15 billion in cumulative inflows since their launch. Leading the pack is the Blackrock Spot ETF, with approximately $1.40 billion in assets under management (AUM), followed closely by the Fidelity Spot ETF with approximately $1.26 billion in AUM.
This inflow was partially offset by the fact that of the eleven Spot ETFs launched, one was the Grayscale Bitcoin Trust (GBTC). GBTC, not a new product but a Trust trade since 2015, underwent a conversion to an ETF. This product has seen significant outflows of approximately $2.81 billion since the conversion, reducing the total inflows of the 11 BTC Spot ETFs from approximately $3.96 billion to $1.15 billion.
At the time of the conversion, GBTC owned approximately 620,000 BTC, which has now been reduced to approximately 552,000 BTC. The strong outflow can mainly be attributed to two factors: first, GBTC customers were not allowed to redeem their shares and could only sell them on the secondary market due to the structure of the product before the conversion. This forced many clients to hold their positions for years without an exit option unless they were willing to sell at a significant discount on the secondary market. Secondly, Grayscale’s higher management fee (1.5%) compared to most competitors (0.2%/0.3%) has led some investors to withdraw their investment from Grayscale, either to cash in on profits or to reinvest in more cost-effective ETFs.
The BTC Spot ETFs saw robust activity with high trading volumes. Since launch, the eleven Spot ETFs’ cumulative trading volume in six trading days has been approximately $16.6 billion, for an average of approximately $2.77 billion per day. As expected, GBTC saw the highest volume given the massive amount of BTC held in custody and the dynamic activity related to the conversion of the Trust into an ETF.
With the successful launch of BTC Spot ETFs, market participants and analysts are now turning their attention to the potential inclusion of various digital assets into ETFs. Analysts predict, with a probability of more than 70%, the adoption of Ethereum (ETH) Spot ETFs this year. This expectation is reinforced by analyzing ETH’s price action. Immediately after the approval of BTC Spot ETFs, capital shifted from BTC to ETH. ETH rose 17% against BTC and 11% in dollars in the approval week, indicating that market participants are counting on the approval of ETH Spot ETFs after greenlighting BTC Spot ETFs and adjusting their positions accordingly.