In a landmark moment for the cryptocurrency industry, US-listed bitcoin exchange-traded funds (ETFs) saw a blistering debut, with $4.6 billion worth of shares traded by Thursday afternoon. This comes after the US Securities and Exchange Commission (SEC) finally approved eleven spot bitcoin ETFs on January 10, ending a decade-long struggle.
BlackRock’s iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF led the charge, igniting a fierce battle for market share. Despite strong initial volumes, analysts cautioned that this is a marathon, not a sprint.
Caution Amidst Buzz:
While Todd Rosenbluth, strategist at VettaFi, acknowledged the strong trading debut, he emphasized the need for a long-term perspective. The SEC’s green light, however, wasn’t an endorsement. Chair Gary Gensler clarified that Bitcoin is “speculative and volatile,” prompting Vanguard, the largest mutual fund provider, to sit out.
Market Jitters and Fee Feud:
Bitcoin prices responded to the ETF launch by surging to their highest level since December 2021( $48,922). Ether ($2,684), the second-largest cryptocurrency, also jumped as investor sentiment turned positive.
Meanwhile, issuers slashed fees to attract investors. The new ETFs boast fees ranging from 0.2% to 1.5%, with some offering temporary fee waivers. Analysts foresee potential inflows exceeding $10 billion in 2024, with some even projecting a staggering $50 billion to $100 billion in 2023 alone.
However, not everyone is celebrating. Cryptocurrency-related stocks like Riot Platforms and Marathon Digital slumped, highlighting lingering skepticism. While the ProShares Bitcoin Strategy ETF, tracking bitcoin futures, saw a modest gain, Coinbase and Microstrategy fell victim to the cautious mood.
Looking Ahead:
Despite the mixed reactions, some see the ETFs as a catalyst for further innovation. Grayscale CEO Michael Sonnenshein hinted at plans for a covered call ETF, offering investors novel income-generating options on Bitcoin.
The US Bitcoin ETF launch marks a historic milestone, opening up access to the leading cryptocurrency for traditional investors. However, the road ahead remains paved with competition, volatility, and regulatory scrutiny. Whether this is a gold rush or a bubble burst remains to be seen, but one thing’s for sure: the digital asset landscape is forever changed.
See Also: SEC Says Yes to All 11 Spot Bitcoin ETF Applications