Vedant Sahu
In a remarkable development in the financial markets, Bitcoin has recently overtaken silver, becoming the second-largest Exchange-Traded Fund (ETF) commodity in the United States in terms of assets under management (AUM). This shift highlights the rapidly growing interest and investment in digital assets, particularly in Bitcoin.
Just a week into trading, Bitcoin ETFs have surged past their silver counterparts in the U.S., reflecting a significant market interest in Bitcoin investments. Jag Kooner, the Head of Derivatives at Bitfinex, attributed this leap to the accumulated demand for Bitcoin, which has been instrumental in its ascent over silver in terms of AUM.
Silver had long held the position as the second-leading single commodity ETF in the U.S. in terms of AUM. However, the landscape changed dramatically with the introduction of spot Bitcoin ETF funds, including the notable conversion of Grayscale’s GBTC trust into an ETF. Currently, these Bitcoin ETFs hold an impressive total of approximately 647,651 bitcoins, translating to an AUM of around $27.5 billion, as reported by CC15Capital.
The Grayscale Bitcoin Trust ETF (GBTC) alone accounts for about 619,000 bitcoins. In comparison, silver now ranks third within the single commodity ETF asset class, with its AUM spread across five ETFs totaling approximately $11.5 billion. This stands in stark contrast to gold, which maintains its lead with an AUM of $96.3 billion across 19 ETFs in the U.S.
The transformation of Grayscale’s bitcoin trust into an ETF has been a pivotal move, creating the world’s largest bitcoin ETF virtually overnight. Kooner observed that the high level of trading in these new assets is indicative of the strong, previously unmet demand for Bitcoin-focused products. This surge in activity is expected to enhance market liquidity and stability.
In just five days of trading, the combined trading volume for these 11 new Bitcoin funds exceeded $12 billion, as per data from Yahoo Finance compiled by The Block. Kooner anticipates this robust interest to persist, driven partly by competitive fee structures implemented by ETF issuers, which include various discounts and fee waivers. These attractive terms are likely to draw in more investors and intensify competition among ETF providers.
While cryptocurrencies are still viewed by some in the investment community as high-risk, the rapid growth of Bitcoin ETFs is seen as a potential catalyst for the introduction of more innovative crypto ETFs and new underlying assets like Ether.
The Block, an independent media outlet providing news, research, and data in the crypto industry, notes that despite Foresight Ventures being its majority investor, it maintains its commitment to delivering objective and impactful information in the crypto space. The Block emphasizes that its content is for informational purposes and should not be considered as financial or investment advice.