Bitcoin ETF Records Nearly $1B Net Inflows in Just Three Days

• Bitcoin ETFs Attract 21,000 BTC in Three Trading Days
• BlackRock and Fidelity Lead in New Investments
• From a Closed-end Fund to an ETF
• Net Inflows into ETFs
• Bitcoin ETFs: Success or Failure?

Bitcoin ETFs Attract 21,000 BTC in Three Trading Days

In the three trading days following their approval, net inflows into the new Bitcoin$42,260 -0.64% spot exchange-traded funds (ETFs) have amounted to approximately 21,000 Bitcoin (BTC), valued at $894 million at a Bitcoin price of $42,600.

BlackRock and Fidelity Lead in New Investments

Among the new investors, BlackRock's iShares Bitcoin Trust (IBIT) is leading with an addition of 16,362 Bitcoin. It's followed by Fidelity's Wise Origin Bitcoin Fund (FBTC) which added 12,112 Bitcoin. Concurrently, Grayscale's Bitcoin Trust (GBTC) experienced significant exits, losing about 25,000 Bitcoin, and thereby affecting the overall industry inflow.

From a Closed-end Fund to an ETF

Prior to the approval of Bitcoin ETFs by the U.S. Securities and Exchange Commission, GBTC operated as a closed-end fund. Conversion to an ETF took place as similar new products from institutions like BlackRock made their debut. Before the approval of spot ETF, GBTC held about 630,000 Bitcoin and charged a 2% management fee.

Post-conversion, GBTC offers a decreased management fee of 1.5%, albeit it's still at least 100 basis points above its new competitors. Furthermore, its transformation to an ETF means the fund no longer trades at a discount to net asset value (NAV). These facets have prompted GBTC holders to sell, as early returns suggest.

Net Inflows into ETFs

Despite such trends, the new funds invested in ETFs have outpaced the selling activity in GBTC, resulting in overall net inflows into ETFs. Bitcoin's price action has been relatively calm this week, primarily lying in the $42,000-$43,000 range. It's down by slightly over 1% in the last 24 hours, slightly underperforming the 0.6% drop in the The source 20 Index, which monitors the world's most significant and liquid cryptocurrencies.

Bitcoin ETFs: Success or Failure?

Debate is ongoing as to whether the launch of Bitcoin ETF was a success or failure. From the ETF world's perspective, the new products achieved a high level of success, with Bloomberg's Eric Balchunas noting $10 billion in trading volume for the funds in their first three days. He compared this to the 500 ETF launches in 2023 which only achieved a combined trading volume of $450 million throughout the entire year.

However, those arguing that the launch was a failure point to the stagnant Bitcoin price since the ETFs' launch, intense selling activity from GBTC, and early net inflows that, while substantial, have fallen short of some bullish billion-dollar predictions.

As the late editor of the Dow Theory Letters, Richard Russell, said, Markets make opinions. The failure group may claim victory if prices remain flat or decrease for a significant period. However, if Bitcoin exceeds $50,000 this year and potentially challenges its all-time high above $65,000, the ETFs will undoubtedly be considered a significant success.

Edited by Jonathan Stoker