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Spot Bitcoin ETFs buy over 100,000 BTC in a week, while Grayscale sells

The launch of spot Bitcoin exchange-traded funds (ETFs) in the United States has sparked a frenzy of buying and selling activity in the cryptocurrency market. While the Grayscale Bitcoin Trust ETF (GBTC) has been offloading its Bitcoin holdings, nine other spot Bitcoin ETFs have accumulated over 100,000 BTC in just seven trading days.

A tale of two ETFs

GBTC, the first and largest Bitcoin ETF by assets under management (AUM), converted from a trust to an ETF on Jan. 11, 2024, after receiving approval from the Securities and Exchange Commission (SEC) in December 2023. However, instead of attracting more investors, GBTC saw a massive outflow of Bitcoin from its fund, dumping more than 80,000 BTC in the days after its trading launch. The amount is worth about $3 billion at the time of writing, according to CoinGecko.

Many analysts have attributed GBTC’s sell-off to its high trading fees, which are as much as 1.5% without waivers, compared to other ETF sponsors that charge between 0.2% and 0.4%, with some offering temporary waivers. GBTC also faced competition from nine other spot Bitcoin ETFs that launched on the same day, offering lower fees and more liquidity.

Spot Bitcoin ETFs go on a buying spree

According to ETF data, nine spot Bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC), purchased 102,613 BTC in the first seven days after their trading launches. The amount is worth around $4.1 billion at the time of writing, according to CoinGecko.

The amount of Bitcoin purchased by spot Bitcoin ETFs in only seven trading days accounts for 53% of all Bitcoin amassed by the giant BTC investor MicroStrategy over the past three years. According to MicroStrategy’s most recent BTC acquisition report, the firm held an aggregate of 189,150 BTC as of Dec. 26, 2023.

After starting to buy Bitcoin in August 2020, MicroStrategy crossed the 100,000 BTC mark in roughly 300 days, announcing it held 105,085 BTC in June 2021. According to publicly reported data, BlackRock’s IBIT and Fidelity’s FBTC became the largest Bitcoin buyers among spot Bitcoin ETFs since the trading launch, collecting 37,304 BTC and 29,232 BTC, respectively. The Bitwise Bitcoin ETF (BITB) and the ARK 21Shares Bitcoin ETF (ARKB) come next, with 16,451 BTC and 10,630 BTC, respectively.

The impact of spot Bitcoin ETFs on the market

The launch of spot Bitcoin ETFs in the U.S. has been widely anticipated by the crypto community, as it provides a more direct and convenient way for investors to gain exposure to the leading cryptocurrency. Spot Bitcoin ETFs track the price of Bitcoin directly, unlike futures-based ETFs that track the price of Bitcoin futures contracts.

Spot Bitcoin ETFs are expected to boost the demand and liquidity for Bitcoin, as well as reduce the premium or discount of GBTC, which has been trading at a significant discount to its net asset value (NAV) for most of 2023. Spot Bitcoin ETFs may also reduce the volatility and manipulation of the Bitcoin market, as they provide more transparency and regulation.

The launch of spot Bitcoin ETFs in the U.S. marks a major milestone for the crypto industry, as it signals the growing acceptance and adoption of Bitcoin by mainstream investors and regulators. As more spot Bitcoin ETFs enter the market, the competition and innovation in the space will likely increase, benefiting both the investors and the Bitcoin ecosystem.

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