Bitcoin ETFs Soar: Third Largest Inflows as BTC Surpasses $52,000

2024-02-22, 08:55

[TL; DR]

On 28 February the US BTC ETF market recorded the third highest inflows totalling $403 million.

BlackRock iShares Bitcoin Trust (IBIT) Fidelity ARK 21Shares and Bitwise were the best performers on 8 February.

The Bitcoin price may surpass $53,000 before the halving event, anticipated to take place in April this year.

Introduction

We are in the second month after the first launch of spot Bitcoin ETFs in the United States. After their introduction the BTC ETFs have attracted much investments to the extent of surpassing the spot Silver ETFs that have decades in existence. Today, we analyze the recent inflows into the spot BTC market.

Spot Bitcoin ETFs Hit $2.1 Billion Milestone: Unveiling Robust Market Demand for BTC

On 8 February the spot bitcoin ETFs attracted the third largest inflow totalling $403 million since the time of BTC ETF approval in the United States. Such an inflow took place on the day that the bitcoin price spiked to $46,000. Also, these bitcoin flows came at a time when the Grayscale Bitcoin Trust (GBTC) had an outflow of over $100,000.

BlackRock Dominates ETF Flows: $204 Million Inflow Sets Pace in the Growing Crypto Market

So far, the total inflow into the spot bitcoin ETF market in the United States has exceeded $2.1 billion which indicates a high demand for bitcoin. On 8 February BlackRock iShares Bitcoin Trust (IBIT) had the largest inflow of $204 million, followed by Fidelity ARK 21Shares and Bitwise with $128 million and $86 million, respectively. The other 7 BTC ETFs had a total inflow of $27 million. This indicates that ETF trends are attracting many investors.

The success of IBIT and FBTC was a result of much competition that exists in the ETF market. The hype associated with the pre-BTC ETF launch period could have also ignited much interest in the investment assets and bitcoin market.

The multiple approval of the best bitcoin ETF issuers’ assets created much competition right from the start which led to their exceptional performance. More significantly, IBIT and FBTC have outperformed the three best broad index funds that track the S&P 500 and Vanguard’s Total Stock Market ETF.

There is no question that these BTC exchange-traded funds have attracted billions of dollars from people who intend to invest in bitcoin without encountering the complexities of buying and holding BTC.

Blackrock’s Trading Triumph: Surpassing Grayscale in Record Time, Defying Traditions in Fund Liquidity

In a related development, IBIT became the first BTC ETF to surpass GBTC’s daily trading volume. Nonetheless, it was the first time the ETF total trading failed to reach $1 billion since the time of first BTC ETF approval. It is clear that the demand for spot bitcoin ETFs is high.

Eric Balchunas, Bloomberg senior analyst, said that it was unusual for a new investment asset like IBIT to surpass $GBTC’s trading volume within less than two months after its launch.

According to Balchunas GBTC has been a king of liquidity for a long period. He said on X.com, “Still some after hours trading left but looks like BlackRock’s $IBIT is the first ETF to trade more than Grayscale $GBTC in a single day.”

Balchunas added, “Total trading today was kind of a dud though at $924 million — first day below $1 billion in dollar volume for the group since launch.” The following table shows the inflows into the United States spot bitcoin ETF market on the 8 February.

Source: x.com

As the table indicates, the total BTC ETF trading volume on 8 February was less than $1 billion, despite the IBIT and FBTC’s outstanding performance.

Bitcoin Halving Countdown: Anticipating New Price Discovery as Supply Shrinks amid Institutional Demand

Some crypto analysts predict the price of bitcoin to rise as we approach the halving event, expected in April this year. As per a Bloomberg publication, Caroline Mauron, the co-founder of Orbit Markets - a digital-asset derivatives liquidity provider – the slowdown in Grayscale outflows will likely create bitcoin bullish momentum. He forecasts that bitcoin may reach $50,000 before halving.

He said for Bloomberg, “We expect the Bitcoin halving narrative to gather momentum over the next few weeks, which should help drive a rally through the psychologically important $50,000 level.”

The next bitcoin halving will reduce the mining reward from 6.25 BTC to 3.125 BTC which affects its supply. Related to this, Grayscale has mentioned that this year’s halving will be fundamentally different from the previous ones for several reasons.

First, this is the first halving event that will occur after the launch of ordinal inions which have revitalized the bitcoin blockchain. Right now, in February alone, for instance, bitcoin has generated over $200 in transaction fees for the BTC miners. Related to this, Grayscale said, “This trend is expected to persist, bolstered by renewed developer interest and ongoing innovations on the Bitcoin blockchain.”

The bitcoin ETFs over bitcoin will help to create a bullish momentum for the number one cryptocurrency. Primarily, the high demand for spot bitcoin ETFs will help to absorb the sell pressure as they provide a steady source of demand for the asset.

Grayscale commented, “As we get closer to the 2024 halving, Bitcoin is not just surviving; it’s evolving. Following the landmark approval of spot Bitcoin ETFs in the United States and changing flows, the very structure of Bitcoin’s market is evolving.”

Nonetheless, no one can be definite about the direction the bitcoin price will take after the 2024 halving event. If there has been a certainty of a post-halving bitcoin surge many investors would have purchased high amounts of BTC.

Conclusion

On 8 February the bitcoin ETF market recorded a large inflow of about $403 million. The best bitcoin ETFs on that day were BlackRock iShares Bitcoin Trust (IBIT) Fidelity ARK 21Shares and Bitwise. In the meantime, analysts believe that the rising demand for spot bitcoin ETFs may be able to absorb the BTC selling pressure as we go towards the 2024 halving event.

FAQs about Bitcoin ETFs

What are the best bitcoin ETFs?

BlackRock iShares Bitcoin Trust (IBIT) Fidelity ARK 21Shares and Bitwise are the best spot bitcoin ETFs in the United States at the moment. However, there are other 8 spot BTC ETFs on the U.S ETF market.

How many bitcoin ETFs are there?

There are 11 spot bitcoin ETFs approved and launched in the United States. ARK 21Shares Bitcoin ETF, Bitwise Bitcoin ETF, Blackrock’s iShares Bitcoin Trust, Franklin Bitcoin ETF, Fidelity Wise Origin Bitcoin Trust, Grayscale Bitcoin Trust, Hashdex Bitcoin ETF, Invesco Galaxy Bitcoin ETF, VanEck Bitcoin Trust, Valkyrie Bitcoin Fund and WisdomTree Bitcoin Fund are the 11 spot bitcoin ETFs registered in the United States.

More important information about High-Profile Spot Bitcoin ETF Applications

Does vanguard have a bitcoin ETF?

Vanguard does not have a spot bitcoin ETF and does not have a plan to launch one. The asset management giant said that it has no intention to fund crypto-related products.

Which ETF is best for bitcoin?

The BlackRock iShares Bitcoin Trust (IBIT) Fidelity ARK 21Shares (FBTC) are the best ETFs for bitcoin. Nonetheless, IBIT is performing better than FBTC at the moment.

How does bitcoin ETF work?

A spot bitcoin ETF is an investment asset that tracks the value of bitcoin. If the price of bitcoin increases the shares of the ETFs also rise by similar margins.

Author: Mashell C., Gate.io Researcher

*This article represents only the views of the researcher and does not constitute any investment suggestions.

*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.