Spot Bitcoin exchange-traded funds (ETFs) witnessed a significant milestone on 7 February as its daily trading volume soared past the $1 billion mark. Leading the charge was BlackRock’s iShares Bitcoin Trust (IBIT).
IBIT alone accounted for $341.2 million of the day’s volume. This surge in trading volume comes in the wake of the historic approval by the Securities and Exchange Commission (SEC) in January 2024.
This set the stage for a competitive landscape among the major players in the crypto ETF market.
The ETF titans
Grayscale’s Bitcoin Trust, once the leader with its early advantage and established presence in the crypto space, recorded a trading volume of $296.5m.
However, BlackRock’s stronghold in traditional finance and its extensive investor base have propelled IBIT to the forefront.
Fidelity’s FBTC fund also showcased strong performance, contributing $200m to the total volume.
The collective contributions of these and other funds have pushed the day’s total trading volume beyond the billion-dollar threshold. This reflected a widespread and robust interest from investors across the board.
A “big volume day”
Ever since the approval of these funds in the US, analysts have predicted explosive growth in the ETF landscape.
Bloomberg Intelligence analyst, James Seyffart, remarked on the significance of this “big volume day” for BlackRock’s IBIT in a post shared on X-
However, it might not yet signify a major milestone in the broader context of Bitcoin ETF trading history, said Seyffart. Even though the figure represents an increase compared to recent days, it still falls short of the early weeks of trading.
Surpassing corporate giants
In the midst of these developments, the spotlight also shines on the inflow and outflow dynamics within the market. Spot Bitcoin ETFs have continued to attract more investments, outpacing outflows from Grayscale Bitcoin Trust (GBTC) for the ninth consecutive day.
Initial figures from Farside indicate a significant shift in investor sentiment on 7 February. The GBTC saw outflows amounting to $81m, in stark contrast to the collective inflow of $226m garnered by the nine other spot Bitcoin ETFs, culminating in a net positive flow of $145m across the sector.
Drilling down into the specifics, BlackRock’s ETF emerged as a notable beneficiary, attracting $56m in new investments. Fidelity’s offering outshone with a remarkable increase of $130m. Bitwise also enjoyed a boost, securing $21m in fresh inflows.
Interestingly, there have also been predictions that the rapid accumulation of Bitcoin holdings in these ETFs is poised to surpass those of MicroStrategy. The latter is the largest corporate holder of the asset.
Analysts from JPMorgan have identified liquidity metrics where BlackRock and Fidelity’s offerings outperform GBTC. This suggested a more favourable market position for these ETFs in terms of market breadth and price stability relative to their net asset value.
They also highlighted a point that if GBTC fees aren’t reduced, the fund will likely see more outflows and lose funds to other ETFs, especially BlackRock and Fidelity’s Bitcoin ETFs.