With three full days of trading on the books as of Tuesday's close, net inflows into the newly approved spot Bitcoin exchange-traded funds appear to be about 21,000 Bitcoin (BTC), or $894 million, at the current price of $42,600.
In terms of new funds, BlackRock's iShares Bitcoin Trust (IBIT) leads the way with 16,362 Bitcoin, followed by Fidelity's Wise Origin Bitcoin Fund (FBTC) with 12,112 Bitcoin. Large exits from Grayscale's Bitcoin Trust (GBTC), which lost about 25,000 Bitcoin, have reduced overall industry inflows.
Until the US Securities and Exchange Commission blessed Bitcoin ETFs last week, GBTC existed as a closed-end fund. It was converted into an ETF as other new products from companies like BlackRock launched last week. GBTC had charged its customers a 2% management fee and held about 630,000 Bitcoins before the spot ETF approval.
While GBTC's ETF version charges a reduced management fee of 1.5%, that's still at least 100 basis points more than its new competitors. Additionally, converting to an ETF meant the fund was no longer trading at a discount to net asset value (NAV). Combined, these two factors have given GBTC holders good reason to sell, and early returns suggest that this is happening.
However, this was overshadowed by the new money inflows into the ETFs, which resulted in the net inflows into the ETFs overall.
Price action has been much quieter this week, with Bitcoin mostly settling in the $42,000 to $43,000 range. At press time, the value is down just over 1% in the last 24 hours, slightly below the 0.6% decline in the CoinDesk 20 index, which tracks the world's largest and most liquid cryptocurrencies.
The debate has now shifted to whether the launch of the Bitcoin ETF was a success or a failure. For the ETF world in general, the new products have been a complete success, argued Bloomberg's Eric Balchunas, pointing to $10 billion in trading volume for the new funds in the first three days. He said there were 500 ETF launches in 2023, which together generated just $450 million in volume for the entire year.
The bust crowd points to sluggish price performance since launch (Bitcoin is down nearly 10%), GBTC's sizable share of selling activity, and early net inflows that, while significant, have fallen short of some billion-dollar bullish forecasts .
“Markets form opinions,” said Richard Russell, the late editor of Dow Theory Letters. If prices remain flat or fall for much longer, the “bust” contingent will likely win, but if Bitcoin hits $50,000 this year and perhaps challenges its all-time high of over $65,000, the ETFs certainly considered a huge success.
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