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Bitcoin ETFs hit $10 billion in assets as investors flock to crypto

The popularity of Bitcoin exchange-traded funds (ETFs) has soared in the past month, as investors seek exposure to the leading cryptocurrency without having to deal with the complexities of buying and storing it directly.

According to data from BitMEX Research, the nine spot Bitcoin ETFs that launched in January have collectively amassed over $10 billion in assets under management (AUM) in their first 20 trading sessions. These funds allow investors to buy and sell shares that track the price of Bitcoin on regulated exchanges, offering convenience, liquidity, and security.

Source: BitMEX

The largest of these funds is BlackRock’s IBIT, which currently holds Bitcoin worth $4 billion, followed by Fidelity’s FBTC, with $3.4 billion in Bitcoin. ARK 21Shares’ fund also crossed the $1 billion mark, while the other six funds have between $200 million and $900 million in AUM each.

The surge in Bitcoin ETF inflows contrasts with the decline in Grayscale’s Bitcoin Trust (GBTC), which was previously the dominant vehicle for institutional investors to gain exposure to Bitcoin. GBTC has seen $6.3 billion in outflows in the past 30 days, as investors switched to the cheaper and more efficient ETFs. GBTC’s premium, which measures the difference between the price of its shares and the value of its underlying Bitcoin, has turned negative, indicating a lack of demand.

“I thought the Nine would get a bit weaker as GBTC outflows subsided but they’re getting stronger,” commented Bloomberg analyst Eric Balchunas on Twitter. He added that the Bitcoin ETFs are “eating GBTC’s lunch” and that the trend is likely to continue as more trading firms and investors adopt the new products.

The U.S. Securities and Exchange Commission (SEC) approved the first batch of Bitcoin ETF applications on Jan. 10, after years of rejecting or delaying similar proposals. The SEC cited the improved market conditions, regulatory clarity, and investor protection measures as the reasons for its change of stance. The approval of Bitcoin ETFs was widely seen as a major milestone for the crypto industry, as it signaled the growing acceptance and legitimacy of digital assets among regulators and mainstream investors.

The success of the Bitcoin ETFs could also pave the way for more crypto-related products in the future, such as ETFs for other cryptocurrencies, or funds that track crypto indexes or sectors. The SEC is currently reviewing several applications for such products, and some analysts expect the agency to approve them in the coming months.

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