Special Report: The approval of nine spot Bitcoin ETFs has been the leading hype narrative in the crypto sphere over the past several months. Now, a month on from that fateful decision, Bitget helps us assess the ETFs’ impact and how they’re tracking.
On January 10 this year US Securities and Exchange Commission boss Gary Gensler, with one reluctant movement of a pen, potentially opened the floodgates of American – and global – institutional money to cascade into the world of crypto, specifically Bitcoin.
We say reluctant, because Gensler hasn’t exactly been a champion of all things crypto over the past few years. Which is putting it mildly.
The thing is, though, the granting of the nine spot Bitcoin ETF filings that had been gathering dust in the SEC’s in-tray, didn’t have the immediate spectacular effect of sending Bitcoin to the moon and beyond, to galaxies far, far away – like some/many had believed/hoped it might.
But then, the crypto world has always tended towards teenage Luke Skywalker-esque impatience.
Now, one month on, though, as BTC hovers near US$52k at time of publishing – levels it hasn’t seen in about 26 months – it’s clear the ETF approvals haven’t exactly been a sell-the-news event, either.
Bitget – one of the crypto world’s leading, most prominent and widely used exchanges – helps us break down some of the most important points to note here, including…
What are these Bitcoin ETFs again?
“These ETFs, which track the price of Bitcoin directly, offer investors a convenient and regulated way to gain exposure to the world’s largest cryptocurrency,” wrote Bitget Research in a recent report on the topic.
And there’s currently nine of them – of which by far and away the most successful is the iShares Bitcoin Trust (IBIT), which is a BlackRock product. And we don’t need to tell you who/what that is, do we?
In short, they’re the world’s most successful real-life Monopoly winner, with a stake in everything.
Fidelity’s FBTC is also a major frontrunner and VanEck and Cathie Wood’s are among other prominent entities spruiking their BTC wares to institutional investors in this category.
“Since their inception, spot Bitcoin ETFs have garnered significant attention and investment inflows,” said Bitget.
In fact, the ETFs have been downright impressive, making them some of the most successful ETFs to launch in the history of launching US ETFs.
“These ETFs have quickly amassed substantial assets, with over $10 billion flowing into them since their debut,” noted the global crypto exchange.
And that’s, frankly, a pretty stunning debut.
As we said, leading the charge are BlackRock and Fidelity’s products, with about US$4bn and US$3.4bn respectively.
Outflows, inflows… and more inflows
If there was a muted response at first, it can be at least partly put down to Bitcoin outflows from the Grayscale Bitcoin Trust product – GBTC, which has now been successfully converted into one of the new ETFs.
Inflows into the leading Bitcoin ETFs have begun to significantly outpace the GBTC outflows, however.
Why the outflows in the first place, though?
“The decrease can be largely attributed to the significant sell-off of GBTC since its transition from a trust to an ETF,” said Bitget
“Despite being a pioneer and once the go-to investment vehicle for institutional investors in the crypto space, GBTC has faced challenges in the wake of spot Bitcoin ETFs’ launch.”
Data reveals that GBTC was losing approximately US$191.7 million each day, added the exchange.
“The emergence of more cost-effective and accessible ETF options has contributed to GBTC’s decline in market share. However, despite the outflows, GBTC remains a prominent player in the cryptocurrency market with a total market cap of $20.34 billion.
“Recent data also reveals that ETFs now hold over 3% of all Bitcoin in existence, highlighting the growing institutional interest in the cryptocurrency.
“This milestone underscores the increasing acceptance of Bitcoin as a legitimate asset class and highlights its readiness for future adoption and mainstream integration,” said the exchange’s analysts.
This following chart and post has been doing the crypto-centric rounds on X this week, which shows that the GBTC-related outflows have recently markedly slowed compared with ongoing and increasing BTC ETF inflows, particularly to the IBIT and FBTC products in particular.
https://twitter.com/BitcoinMagazine/status/1757051522905489554
And this trend, as you might expect, seems to be having a positive impact now on the price of Bitcoin.
Bitget adds:
“It’s important to note that it has only been a month since the ETFs launched, and the long-term impact has yet to be fully revealed. With the halving of Bitcoin looming in April this year, it is not unreasonable to expect a surge in Bitcoin’s price boosted by the release of Bitcoin ETFs.”
The Google effect
There’s another factor at play that might also be contributing to increased interest, increasing inflows into the spot Bitcoin ETFs, says Bitget.
And that’s the fact that Google, despite a history of inconsistency with cryptocurrency advertising, has permitted itself to allow ads for crypto ETFs.
“This policy change enables asset managers to promote their Bitcoin ETFs through Google search results, reaching a wider audience of potential investors.
“Asset managers, including BlackRock, Fidelity, Grayscale, Invesco, and Bitwise, have wasted no time capitalizing on this opportunity, launching extensive online advertising campaigns.
“With Google’s extensive reach and influence, the decision to permit crypto ETF ads is expected to further fuel the growth of these investment products and drive broader adoption among retail investors.”
Overall potential impact of the Bitcoin ETFs
Regarding all-encompassing thoughts on the likely impact of spot Bitcoin ETFs, Bitget has a few…
“The increasing institutional adoption of Bitcoin and other cryptocurrencies has far-reaching implications for the broader crypto market,” believes the exchange.
As more institutional players enter the crypto space, there’s an expectation the market will mature, leading to greater liquidity, stability, and investor confidence.
And this means a greater chance of continued institutional interest and a lot more capital flooding in – the way large investors eventually piled into gold ETFs after those first hit markets back in 2023.
With Hong Kong set to launch its own spot Bitcoin ETFs and South Korea reportedly showing renewed interest, Bitget notes that “it’s likely that more countries, particularly those with established financial hubs, will express interest in launching their own spot Bitcoin ETFs to capitalise on the growing demand for cryptocurrency investment products.”
“The rapid growth of spot Bitcoin ETFs in the US has served as a catalyst for other nations to explore similar investment avenues,” added Bitget Research, concluding:
“As institutions are more involved with the crypto market, governments around the world are increasingly recognizing the need to adapt their regulatory frameworks to accommodate the changing landscape of digital assets.”
See also: Bitget Study: Assets Under Custody Surged by 250%, Highlighting Opportunities for Pursuit
This article was developed in collaboration with Bitget, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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