The price of the world’s largest cryptocurrency surpassed $70,000 on Friday.
BlackRock’s bitcoin exchange-traded fund has crossed $10 billion quicker than any other US ETF in history, thanks to a surge that is sending the world’s largest cryptocurrency to new highs.
According to Morningstar, BlackRock’s iShares Bitcoin Trust (IBIT) reached that milestone in less than two months after its January 11 inception, outperforming Invesco QQQ’s record of little over a year. IBIT’s total assets are currently about $12.7 billion, the result of bitcoin’s gain and more than $7 billion in net inflows.
IBIT and the other nine spot bitcoin ETFs approved by the Securities and Exchange Commission on January 11 have been boosted by a surge that brought the price of bitcoin above $70,000 on Friday, reaching a new high before settling at $68,500 as of Friday afternoon.
According to Morningstar Direct statistics, the 10 spot bitcoin ETFs had net inflows of around $7 billion between their mid-January debut and the end of February, including $8.5 billion in withdrawals from the $27.5 billion Grayscale Bitcoin Trust ETF (GBTC). The Fidelity Wise Origin Bitcoin ETF has acquired around $7.6 billion in assets, putting it in position to be the second-fastest to reach $10 billion behind its iShares counterpart.
Much of the recent investments in bitcoin ETFs appear to be from investors who were “trapped inside GBTC” and have departed the priciest bitcoin ETF in favor of a less pricey option, according to Dave Nadig, a longtime ETF observer who has been examining bitcoin ETF trading patterns.
According to Nadig, high-frequency traders have contributed significantly to the enormous trading volumes in bitcoin ETFs in recent weeks. “It’s just algo players trying to scalp pennies.”
While high-frequency traders and hedge funds have shown an increased interest in bitcoin ETFs and arbitrage opportunities, regular investors appear to be driving the majority of new assets into BlackRock’s new cryptocurrency products.
“The buyers of these things are primarily individual investors looking to access crypto through their tax-advantaged retirement accounts and brokerage accounts,” Zach Pandl, Grayscale’s director of research, explained.
GBTC had a head start on bitcoin ETF assets from its inception over a decade ago, with a structure that made it difficult for investors to leave quickly. However, investors are fleeing the fund and its 1.5% management charge now that they can more easily transfer their assets to lower-cost competitors, some of which have eliminated their costs totally.
“We’re incredibly proud of GBTC and what it has meant for the industry, and we intend to make it a competitive product over time,” Pandl went on to say.
The surge following the SEC’s long-awaited spot bitcoin ETF clearance has been so strong that the net assets in Grayscale’s ETF have virtually recovered since its conversion, allowing long-term investors to exit and profit from bitcoin’s huge climb over the last decade.
According to Morningstar, recent launches by JPMorgan and State Street Global Advisors have all crossed the $10 billion mark in around two years. State Street’s SPDR Gold Shares ETF (GLD), which debuted in late 2004, was equally quick to reach $10 billion, surpassing that milestone in early 2007.
“I had high expectations, and this far exceeded them,” said James Seyffart, a research analyst at Bloomberg Intelligence. “Demand is being pulled forward much quicker.”
Seyffart stated that bitcoin has grown more secure after the January ETF launch. “The probability that this goes to zero is way less, particularly after the SEC approving these ETFs, which takes away some of the downside risk,” he went on to say.
Bitcoin ETFs from iShares, Fidelity, and Cathie Wood’s Ark Investment Management have received the most fresh capital since their inception, whereas similar products from Wisdom Tree, Valkyrie, and Franklin Templeton have performed poorly, according to Morningstar Direct statistics.
if WisdomTree’s $58 million bitcoin ETF has not had as much success raising assets as most of its rivals, “it’s actually been one of our more successful ETF launches, even though we’re not taking in an iShares level of volume,” said Will Peck, WisdomTree’s head of digital assets.
“It helps that bitcoin’s gone on a tear since these have launched,” Peck went on to say. “I was expecting it to be kind of a ‘buy the rumour, sell the news’ sort of situation, but it shows how hard it is to know anything with this asset class.”
