As of Thursday afternoon, U.S.-listed bitcoin exchange-traded funds (ETFs) have witnessed a substantial trading volume of $4.6 billion, according to LSEG data. The surge in trading activity follows the approval of these landmark products by the U.S. securities regulator on Wednesday, marking a significant moment for the cryptocurrency industry.
Eleven spot bitcoin ETFs, including prominent ones such as BlackRock's iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF, began trading on Thursday, initiating a competitive race for market share. Notably, Grayscale, BlackRock, and Fidelity emerged as dominant players in trading volumes, as per the LSEG data.
While the green light from the U.S. Securities and Exchange Commission (SEC) is seen as a pivotal development for the cryptocurrency sector, some executives caution about the high-risk nature of bitcoin as an investment. Vanguard, the largest provider of mutual funds, has stated that it does not plan to offer the newly approved spot bitcoin ETFs on its platform to brokerage clients.
SEC Chair Gary Gensler emphasized that the approvals should not be interpreted as an endorsement of bitcoin, describing it as a "speculative, volatile asset." The ETF launches have contributed to a surge in the price of bitcoin, reaching its highest level since December 2021.
The regulatory approval has triggered intense competition among issuers for market share, leading to fee reductions well below the industry standard. Fees for the new bitcoin ETFs range from 0.2% to 1.5%, with some issuers offering fee waivers for a specific period or asset volume. Grayscale, in particular, received approval to convert its existing bitcoin trust into an ETF, instantly becoming the world's largest bitcoin ETF with over $28 billion in assets under management.
Estimates vary regarding the potential flows into spot bitcoin ETFs, with projections ranging from $10 billion in 2024 by Bernstein analysts to Standard Chartered's forecast of $50 billion to $100 billion in the current year alone. Market participants closely monitor bid-ask spreads, emphasizing the significance of trading volume, internal infrastructure, and participant involvement in driving favorable spreads.
While the approval is viewed as a significant step, some analysts remain cautious, noting that broader market sentiment toward cryptocurrencies is still characterized by a perception of risk. Notably, Vanguard emphasized its focus on traditional asset classes and expressed skepticism about the inclusion of cryptocurrencies in investment portfolios.
Cryptocurrency-related stocks initially experienced gains but ended the day lower, reflecting some investor caution. Despite the mixed market reaction, expectations persist that these approved products may pave the way for innovative crypto ETFs, including those focused on spot ether products
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