Investment giants BlackRock and Fidelity have emerged as frontrunners in the newly-approved spot Bitcoin exchange-traded fund (ETF) market, with a combined trading volume of $11 billion and approximately $800 million in inflows in the first two days of trading, according to research by Bernstein.
The surge in activity follows the recent approval by the US Securities and Exchange Commission (SEC) for 11 spot Bitcoin ETFs. BlackRock and Fidelity led the charge, securing $498 million and $422 million in total flows, respectively, over the initial two days of trading.
Bitwise and Ark were close contenders, notching up $238 million and $105 million in flows during the same period. However, it’s worth noting that ProShares, included in the Bernstein report as a spot Bitcoin ETF, is, in fact, a futures Bitcoin ETF.
Excluding ProShares, the total volume in the first two days amounted to approximately $7.9 billion, aligning closely with the $7.8 billion estimate by Bloomberg Intelligence analyst Eric Balchunas.
Market Dynamics and GBTC Impact
Bernstein’s report suggests that the significant gap between the $800 million in inflows and the substantial $11 billion trading volume could be attributed to market makers capitalizing on liquidity in leading funds. There’s potential arbitrage between the Grayscale Bitcoin Trust (GBTC) discounts and premiums on other ETFs.
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While GBTC dominated trading volumes at $4.3 billion, it experienced net outflows of $580 million. The historical discrepancy between GBTC’s share price and the spot price of Bitcoin is expected to shrink as it transitions into an ETF.
During the first two days of Bitcoin ETF trading, the GBTC discount stood at 1.17%, whereas other ETFs traded at premiums ranging from 0.13% to 0.5%. This difference allowed market makers to profit from the price differential.
Market Outlook
Bernstein’s analysis concludes with a forecast of potential temporary weakness in Bitcoin, with a speculated local bottom in the range of $38,000 to $42,000. The evolving dynamics in the ETF market, coupled with the transition of GBTC to an ETF structure, are expected to have a significant impact on Bitcoin’s pricing and market behavior.
As settlement times may influence the final trading volumes on the first two days, market participants eagerly await further developments in this rapidly evolving landscape.
