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Bitcoin ETFs Break Volume Records as Price Surges to New Highs

Bitcoin exchange-traded funds (ETFs) in the United States have witnessed a surge in trading volumes on Feb. 28, as the price of the leading cryptocurrency soared to over $64,000, a level not seen since November 2021.

According to data from Bloomberg ETF analyst James Seyffart, the ten Bitcoin ETFs in the US market saw a combined volume of $7.69 billion on Sunday, surpassing the previous record of $4.66 billion set on Jan. 11, the launch day of the first Bitcoin ETF in the country.

The iShares Bitcoin ETF (IBIT) by BlackRock, the world’s largest asset manager, was the most traded fund of the day, with $3.35 billion in volume, accounting for 43.5% of the total. The fund also doubled its own daily record, which was $1.67 billion on Feb. 25.

Source: James Seyffart

The Grayscale Bitcoin Trust (GBTC), the oldest and largest Bitcoin fund in the US, came in second with $1.86 billion in volume, followed by the Fidelity Wise Origin Bitcoin Fund (FBTC) with $1.44 billion. The two funds together made up another 43% of the total volume.

The other seven Bitcoin ETFs, which were all launched in January and February this year, also saw impressive volumes, ranging from $164 million to $387 million. Bloomberg analyst Eric Balchunas noted that it took only half the trading day for these nine funds to beat their previous record, excluding GBTC.

The spike in Bitcoin ETF trading coincided with a strong rally in the Bitcoin price, which jumped over 10% on Sunday to reach a high of $64,000, the highest level since Nov. 10, 2021. The cryptocurrency has been on an upward trend since mid-February, after Tesla announced that it had bought $1.5 billion worth of Bitcoin and would accept it as a payment option.

Bitcoin has since retraced to as low as $60,000, but has slightly recovered to trade above $62,000 at the time of writing, according to Cointelegraph Markets Pro.

While Bitcoin ETFs have attracted more investors and traders, the Grayscale Bitcoin Trust has seen some outflows in recent days. According to preliminary data from Farside Investors, the fund saw $216.4 million in net outflows on Feb. 28, the highest since Jan. 30, when it had $220.7 million in outflows. This is also a record for February, which has seen a total of $1.03 billion in outflows so far.

The outflows from GBTC could be partly explained by the competition from the new Bitcoin ETFs, which offer lower fees and better liquidity. GBTC charges a 2% annual fee, while the ETFs charge between 0.4% and 0.95%. GBTC also trades at a discount to its net asset value (NAV), meaning that investors can buy the fund for less than the value of the underlying Bitcoin. This could indicate a lack of demand or a preference for other products.

However, GBTC still remains the dominant Bitcoin fund in the US, with over $35 billion in assets under management (AUM) as of Feb. 26, according to Grayscale’s website. The iShares Bitcoin ETF, the largest among the ETFs, has only $1.3 billion in AUM as of Feb. 25, according to BlackRock’s website.

Bitcoin ETFs are seen as a milestone for the cryptocurrency industry, as they provide a more accessible and regulated way for investors to gain exposure to Bitcoin. The US Securities and Exchange Commission (SEC) has so far approved ten Bitcoin ETFs, all of which are based on Bitcoin futures contracts rather than the spot market. The SEC has yet to approve a Bitcoin ETF that directly holds Bitcoin, citing concerns over market manipulation, custody, and investor protection.

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