Bitcoin ETFs hit $10 billion in trading volume in three days

The first spot Bitcoin ETFs in the U.S. have attracted massive trading interest since their launch on Jan. 11, surpassing $10 billion in volume in just three days.

According to data from Bloomberg Intelligence analyst James Seyffart, the two spot Bitcoin ETFs, iShares Bitcoin Trust (IBIT) and Valour Bitcoin Trust (VBTC), have seen more than $10 billion in combined trading volume as of Jan. 16.

This is an unprecedented level of activity for new ETFs, as Seyffart noted in his post on X (formerly Twitter). He compared the spot Bitcoin ETFs with the 500 ETFs that were launched in 2023, which had a combined volume of $450 million on Jan. 16. The best-performing ETF among them had a volume of $45 million.

Source: Bloomberg

“Let me put into context how insane $10b in volume is in first 3 days,” Seyffart wrote. “There were 500 ETFs launched in 2023. Today, they did a COMBINDED $450m in volume. The best one did $45m. And many have had months to get going. $IBIT alone is seeing more activity than the entire ’23 Freshman Class.”

The spot Bitcoin ETFs allow investors to directly buy and sell Bitcoin through a regulated exchange, unlike the previous Bitcoin futures ETFs, which track the price of Bitcoin futures contracts. The spot Bitcoin ETFs are expected to offer lower fees, higher liquidity, and more accurate price discovery for Bitcoin.

However, the spot Bitcoin ETFs have also faced some criticism, as some observers have pointed out that they have not had a significant impact on the price of Bitcoin, which has been trading below $45,000 since Jan. 12. Some have also questioned the need for a spot Bitcoin ETF, given that investors can already buy and sell Bitcoin directly through various platforms.

Eric Balchunas, another Bloomberg Intelligence analyst, defended the spot Bitcoin ETFs, arguing that they offer a convenient and accessible way for investors to gain exposure to Bitcoin. He also highlighted the impressive trading volume of the spot Bitcoin ETFs, which he said shows the strong demand for the product.

“The volume is the story here. It shows there is a ton of demand for a spot Bitcoin ETF, even if some think it’s unnecessary,” Balchunas wrote on X. “The volume also shows that these are not just for institutions or hedge funds, but for regular investors who want a simple and easy way to buy Bitcoin.”

Meanwhile, the Grayscale Bitcoin Trust (GBTC), which was the dominant Bitcoin investment vehicle before the launch of the spot Bitcoin ETFs, has seen a decline in its net inflows and a discount in its share price. GBTC, which holds Bitcoin in a trust and issues shares that trade on the over-the-counter market, has recently converted to an ETF, but it still faces competition from the spot Bitcoin ETFs.

Samson Mow, the CEO of Jan3, a Bitcoin technology company, predicted that the GBTC sell pressure will ease over time, as investors adjust to the new market dynamics. He also said that Grayscale, the sponsor of GBTC, will have to lower its fees to remain competitive with the spot Bitcoin ETFs.

“Time is needed for everything to recalibrate,” Mow wrote on X. “GBTC sell pressure won’t be a long drawn out process. Many just cannot sell because the tax hit is too big, and eventually Grayscale must capitulate on the fees. This is likely to be sooner rather than later.”

The spot Bitcoin ETFs are seen as a major milestone for the Bitcoin industry, as they provide a regulated and mainstream way for investors to access the leading cryptocurrency. The trading volume of the spot Bitcoin ETFs indicates that there is a strong appetite for the product, despite the lackluster performance of Bitcoin in the past week.

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