February 19, 2024 at 13:03 GMTModified date: February 19, 2024 at 13:03 GMT
February 19, 2024 at 13:03 GMT

Bitcoin ETFs net $2.2B in a week, IBIT tops

BlackRock’s IBIT continues to paves the way as Bitcoin ETFs garner $2.2 billion in a landmark week.

Bitcoin ETFs net $2.2B in a week, IBIT tops

Bitcoin exchange-traded funds (ETFs) saw an influx of $2.2 billion last week, setting a new record for investment flows into the crypto space.

This surge, documented by BitMEX Research, underscored the growing appeal of cryptocurrencies as a viable investment option.

From 12 February to 16 February, these ETFs attracted more than $2.2 billion. This marked the highest amount of capital directed into any exchange-traded product in the US during this timeframe.

Bloomberg analyst, Eric Balchunas, highlighted the significance of this event, noting that the combined volume of inflows into these Bitcoin ETFs surpassed a market that includes over 3,400 ETFs.

Leading the charge was BlackRock’s IBIT, which alone drew in over $1.6 billion. This accounted for half of BlackRock’s total net ETF flows out of 417 ETFs, with its year-to-date inflows reaching $5.2 billion.

Other funds, such as Fidelity’s Wise Origin Bitcoin Fund and the Ark 21Shares Bitcoin ETF, also saw substantial inflows, further evidencing the burgeoning interest in cryptocurrency investments.

Despite the overall positive trend, the Grayscale Bitcoin Trust experienced a different fate, with $624 million in outflows during the same period. This is an increase from the previous week’s $411 million.

The shift in investor sentiment towards Grayscale, especially after its transition to a spot ETF on 10 January, which led to over $7 billion in capital outflows, contrasts sharply with the enthusiasm surrounding other Bitcoin ETFs.

Last month, the Securities and Exchange Commission (SEC) greenlighted a total of eleven 19b-4 applications for the same from issuers: BlackRock, Ark Invest, Grayscale, VanEck, Bitwise, Fidelity, Hashdex, WisdomTree, Invesco Galaxy, Franklin, and Valkyrie.

This gave investors direct exposure to Bitcoin without holding it. $BTC is the underlying asset of a spot Bitcoin ETF, unlike regular Bitcoin ETFs, in which Bitcoin futures contracts are the underlying asset.

Effect on Bitcoin

The influx of investments into Bitcoin ETFs has had a palpable impact on the market. 

Bitcoin’s price soared to over $52,000 on 15 February, reaching its highest point in more than two years. This rally was accompanied by a notable increase in trading volume among Bitcoin ETFs, signalling a robust interest in cryptocurrency investments. 

At the time of press, the top coin is changing hands for $53,353, up by over 2% daily and almost 10% weekly. 

Both Awesome Oscillator (AO) and Moving Average Convergence/Divergence (MACD) emanated long green histograms on their respective charts. The Relative Strength Indicator (RSI) was also in the overbought region, above the 60 mark. 

Traders could expect high price volatility and the Bollinger Bands expanded and moved away from each other. 

Major financial institutions have also recognised the potential of these new ETFs. Recently, a coalition of Wall Street’s largest firms have been urging the SEC to revise guidelines that would enable banks to serve as custodians for Bitcoin funds.

According to Santiment, the seven leading spot ETFs experienced daily trading volumes exceeding $1.8 billion in early February. This stands as a testament to the growing integration of digital assets into traditional investment portfolios.

As investments continue to flow into Bitcoin ETFs, the cryptocurrency market is poised for further growth, offering new opportunities for investors looking to diversify their portfolios with digital assets.