Bitcoin ETFs Attract Record Inflows as Crypto Prices Soar

The demand for Bitcoin exchange-traded funds (ETFs) has reached new heights, as investors poured more than $2.2 billion into these products in the week ending Feb. 16. This is the highest weekly inflow ever recorded for Bitcoin ETFs, according to data from Bloomberg and BitMEX Research.

Bitcoin ETFs are funds that track the price of the leading cryptocurrency and trade on regulated exchanges, offering investors a convenient and cost-effective way to gain exposure to the digital asset. The U.S. Securities and Exchange Commission (SEC) approved the first Bitcoin ETFs in January, after years of rejecting numerous applications.

Since then, the market for Bitcoin ETFs has exploded, with several funds launching and competing for market share. The most popular fund is BlackRock’s IBIT, which received $1.6 billion in net inflows last week, accounting for 72% of the total. IBIT has amassed $5.2 billion in assets under management (AUM) year-to-date, representing half of BlackRock’s total net ETF flows.

ETFs flows between Feb.12 – Feb.16. Source: Bloomberg Intelligence/Eric Balchunas.

Other Bitcoin ETFs that have seen strong inflows include Fidelity’s FBTC, which attracted $648.5 million last week, Ark 21Shares’ ARKB, which garnered $405 million, and Bitwise’s BITB, which drew $232.1 million. These funds have AUMs of $1.8 billion, $1.2 billion, and $621 million, respectively.

The only Bitcoin ETF that has experienced outflows is Grayscale’s GBTC, which lost $624 million last week. GBTC was the dominant product in the market before the ETFs were approved, but it has lost its appeal due to its high fees and discounts. GBTC charges a 2% annual fee, while the ETFs charge between 0.4% and 0.95%. GBTC also trades at a 9% discount to its net asset value, meaning investors are paying less than the actual value of the Bitcoin it holds. GBTC has seen over $7 billion in outflows since it converted from an over-the-counter product to an ETF on Jan. 10.

The surge in Bitcoin ETFs inflows coincides with the rally in Bitcoin prices, which have soared 91% in the past four months. Bitcoin reached a new all-time high of $58,332 on Sunday, before correcting to $51,782 at the time of writing. The cryptocurrency has benefited from the growing institutional and retail adoption, as well as the positive sentiment surrounding the ETFs.

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