Jai Sahu
The inaugural trading day for spot Bitcoin exchange-traded funds (ETFs) saw remarkable activity, with billions of dollars in trading volume and hundreds of thousands of individual transactions.
In total, there were 700,000 individual trades on January 12, involving the 11 recently approved spot Bitcoin ETFs, as reported by industry analyst Eric Balchunas.
This robust trading activity underscores the substantial demand for these products on their first day, as the total trading volumes exceeded $4.3 billion, based on available data.
Balchunas also noted that both the non-spot ProShares Bitcoin Strategy ETF (BITO) and Grayscale’s (GBTC) ETF secured spots in the top ten among all ETFs in terms of trading volume.
All told there were 700,000 individual trades today in and out of the 11 spot ETFs. For context, that is double the number of trades for $QQQ (altho it sees much bigger $ volume bc bigger fish use it) So a lot more grassroots action (vs big seed buys) than I expected which is… pic.twitter.com/syUGfjHQpr
— Eric Balchunas (@EricBalchunas) January 11, 2024
Rapid Rise of Bitcoin ETFs
Grayscale’s Bitcoin Trust witnessed a remarkable start, generating just over $2 billion in trading volume on its inaugural day as a spot ETF, following its fund conversion approval. GBTC’s trading volume nearly matched the combined total of all other Bitcoin Exchange-Traded Products (ETPs), benefiting from its significant head start in assets under management (AUM).
On January 12, ETF analyst James Seyffart shared a similar breakdown of trading volumes for the first day. His calculations revealed a cumulative trading volume of $4.6 billion for the 11 recently launched funds. Following Grayscale, BlackRock and Fidelity secured the second and third positions with trading volumes of $1 billion and $700K, respectively.
Seyffart also suggested that a considerable portion of the trading volume might have resulted from investors shifting from GBTC to the new ETFs, driven by more favorable fee structures, or transitioning from futures-based funds like ProShares to spot-based funds.
“Very easy argument to be made that a ton of this volume was selling of GBTC and buying of other ETFs for now!”
Industry author Vijay Boyapati made a similar conclusion, stating that there are also massive outflows “as many investors rotate out of more costly ways of getting Bitcoin exposure that were available pre-ETF” before adding:
“Long term, the net flows will be very large and positive.”
Here's the #Bitcoin ETF Cointucky Derby data via trading volume on day 1 (more volume will continue for a little while).
Total Volume was over $4.6 Billion with $GBTC about half of it. BlackRock & Fidelity went 1 & 2 absent GBTC. pic.twitter.com/t70MzyQfZW
— James Seyffart (@JSeyff) January 11, 2024
Crypto Market Response
In the wake of the ETF launch, the spot Bitcoin market has exhibited minimal reaction, with the asset experiencing a surge to $49,000 on the launch day, only to retrace to approximately $46,000 at the time of this writing.
Furthermore, the total market capitalization has remained stagnant throughout the day, hovering at $1.85 trillion.
Altcoins, which had seen significant price increases earlier in the week, now seem to be pausing for a breather. Analysts, however, have issued warnings of a potential post-ETF market correction as the initial hype subsides for the time being.