Jai Sahu
Bitcoin’s price has stabilized, concluding the week at about $41,600, marking a minor 0.4% decrease compared to the previous week’s closing at roughly $41,750.
The diminished volatility is credited to the recent approval of ETFs by the SEC, putting an end to speculation on this development, as reported by Matteo Greco, a research analyst at Fineqia International.
According to Greco, the introduction of Bitcoin (BTC) Spot ETFs has drawn substantial investments from traditional finance into the digital assets market. He noted in a statement shared with Cryptonews.com that, since their launch, the 11 Spot ETFs have collectively garnered around $1.15 billion in cumulative inflows.
“Leading the pack are the Blackrock Spot ETF, boasting about $1.40 billion in assets under management (AUM), closely followed by the Fidelity Spot ETF with approximately $1.26 billion in AUM.”
However, the cumulative inflow of the 11 BTC Spot ETFs faced a partial setback due to outflows from the Grayscale Bitcoin Trust (GBTC).
GBTC Experiences Outflows Exceeding $2.8 Billion
An analysis revealed that GBTC, which operated as a trust since 2015, recently underwent conversion into an ETF. Subsequent to the conversion, the product witnessed substantial outflows totaling approximately $2.81 billion. This led to a reduction in the net inflow of the 11 BTC Spot ETFs from $3.96 billion to $1.15 billion.
Before the conversion, GBTC held roughly 620,000 BTC, a number that has now decreased to around 552,000 BTC.
Greco identified two primary factors contributing to the outflows from GBTC. Firstly, customers holding GBTC shares were previously restricted from redeeming them and could only sell them on the secondary market due to the product’s structure. This compelled many customers to hold their positions without an exit option unless they were willing to sell at a significant discount.
Secondly, the higher management fee set by Grayscale (1.5%) compared to most competitors (0.2%/0.3%) prompted some investors to withdraw their investments from GBTC, either to capitalize on profits or reinvest in more cost-effective ETFs.
The BTC Spot ETFs have exhibited robust activity, characterized by high trading volumes. In the six days of trading since their launch, the cumulative trading volume of the 11 Spot ETFs reached approximately $16.6 billion, averaging around $2.77 billion daily.
As anticipated, GBTC recorded the highest volume, given the substantial amount of BTC held in custody and the dynamic activity surrounding the Trust’s conversion into an ETF.
ETH Spot ETFs on the Horizon
With the successful launch of BTC Spot ETFs, attention has now turned to the potential inclusion of various digital assets in ETFs. Analysts predict a high likelihood, exceeding 70%, of Ethereum (ETH) Spot ETFs receiving approval this year.
This expectation is reinforced by the price action of ETH immediately after the approval of BTC Spot ETFs. Capital shifted from BTC to ETH, resulting in a 17% appreciation of ETH against BTC and an 11% increase in dollar terms during the approval week. These movements indicate that market participants are anticipating the approval of ETH Spot ETFs following the green light for BTC Spot ETFs and are adjusting their positions accordingly.