Tag: bitcoin

$10 billion parked in spot Bitcoin ETFs in a month — check which one is the biggest

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Spot Bitcoin exchange-traded funds (ETF) have breached the milestone of $10 billion in assets under management (AUM) just a month after getting approval from the United States securities regulator.

The US Securities and Exchange Commission (SEC) approved as many as 11 spot Bitcoin ETFs on January 10, paving the way for a new investment class.

The value of Bitcoin has appreciated by around 12% since then.

What is a spot bitcoin ETF?

A spot Bitcoin ETF tracks the spot market price of Bitcoin and invests in the cryptocurrency directly at the current market price against ETFs based on futures contracts.

Investment in spot ETFs is economical and easier than direct investment in Bitcoin, leading to their popularity among investors.

According to BitMax Research data, in the 20 trading sessions since the approval, nine spot Bitcoin ETFs reached an AUM total of $10 billion.

The biggest spot Bitcoin ETF

As of February 9, BlackRock’s iShares Bitcoin Trust led the tally with $4 billion in assets. Fidelity’s Wise Origin Bitcoin Fund was second, with total inflows of $3.4 billion.

ARK 21 reached the $1.02 billion mark, BITB Bitwise amassed $0.857 billion of AUM, and BTCO Invesco has a total AUM of $0.343 billion.

On February 9, spot ETFs saw net inflows of $541.5 million in a single day as the price of Bitcoin crossed the $48,000 mark for the first time since ETFs’ approval.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin hovers near one-month high on ETF inflows, looming halving

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bitcoin held near the highest level in a month, supported by signs of steady inflows into a batch of US funds for the token as well as growing attention on the so-called halving due in April.

The largest digital asset was steady at $45,330 as of 9:33 am in Singapore on Friday after advancing about 7% in 2024. Smaller tokens such as Ether and Cardano also traded in narrow ranges.

Nine US spot Bitcoin exchange-traded funds debuted on Jan. 11, while the more than decade-old Grayscale Bitcoin Trust converted into an ETF the same day. The accessibility of ETFs promises to widen the investor base for the token. The new funds have attracted a net $8 billion so far, while a $6 billion outflow from the Grayscale fund since its conversion is now losing steam.

“Bitcoin appears set to resume its march up after the Grayscale outflows finally tapered off,” said Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets. The “halving narrative” will gather momentum, potentially taking Bitcoin past $50,000 in the next few weeks, she said.

The quadrennial halving cuts the quantity of Bitcoin that miners receive for operating power-hungry computers that secure the network by solving complex puzzles. Halving is key to capping the supply of Bitcoin at 21 million tokens. Rewards drop to 3.125 coins per block from 6.25 coins in the upcoming event.

Previous halving events “preceded strong bull runs,” a team including DBS Bank Ltd. Chief Economist Taimur Baig wrote in a note. “There is a simple economic reason why prices should rise. As the reward for mining decreases, the price for mining output (namely Bitcoin) must increase to compensate and not trigger a withdrawal of computational resources by miners,” the team said.

Bitcoin remains about $24,000 below the record high the token hit in 2021, during a pandemic-era bull run oiled by easy money.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Largest Bitcoin ETF’s slowing outflows lift some recent crypto gloom

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Slowing outflows from the $20 billion Grayscale Bitcoin Trust may help to stanch a two-week slump in the token, according to strategists.

About $4.8 billion has exited the more than decade-old Bitcoin portfolio — the world’s largest — since it became an exchange-traded fund on January 11, data compiled by Bloomberg shows. Bitcoin has shed some 20% in the same period.

The fund’s conversion from a closed-end format allowed investors to close out a popular arbitrage trade and sparked disposals by the estate of the bankrupt FTX exchange. The daily pace of outflows from the vehicle, also known as GBTC, hit a peak of $641 million on January 22 but cooled to $394 million by January 25.

“We’re starting to see a pattern of decreasing redemptions from GBTC,” Sean Farrell, head crypto strategist at Fundstrat Global Advisors, wrote in a note. “We’ll certainly need to see a few more days of follow-through, but a mere slowing down of this AUM exodus would serve as a large boost for the market.”

The Grayscale fund began trading in its new format on the same day that nine other spot Bitcoin ETFs, including from BlackRock Inc. and Fidelity Investments, debuted in the US. Those funds have attracted more than $5 billion, while the net inflow into the 10 spot ETFs as a whole stands at about $574 million, according to data compiled by Bloomberg.

Shares in the Grayscale vehicle fell to a discount to the portfolio’s underlying Bitcoin holdings from early 2021 when the product was closed-end. ETF units tend to hug net asset value so the prospect of the trust’s conversion led speculators to bet on the discount disappearing, which has duly happened.

“Profit-taking on previous GBTC investments, made at a discount to net asset value last year, has likely been a major driver behind Bitcoin’s correction,” JPMorgan Chase & Co. strategists including Nikolaos Panigirtzoglou wrote in a note. Such profit-taking “should be largely behind us, limiting any downside for Bitcoin from here,” the team added.

The Grayscale Bitcoin Trust “has been dominating trading volume, and has already solidified its role as a true capital markets tool for risk transfer in Bitcoin,” John Hoffman, managing director of sales and distribution at Grayscale Investments, said earlier this week. He added that “GBTC’s diverse shareholder base will continue to deploy strategies that impact inflows and outflows.”

Bitcoin surged almost 160% last year, outperforming traditional assets such as stocks, amid expectations that the US spot ETFs would catalyze wider adoption of the cryptocurrency by institutional and individual investors.

The token has been retreating since the turn of the year and trailing global markets as investors wait to see if the hype becomes reality. The group of US spot Bitcoin ETFs had the most successful ETF launch in history, going by both trading and flow metrics, according to Bloomberg Intelligence.

Bitcoin hit an intraday peak of $49,021 on January 11 when the funds rolled out before sliding to a low of $38,510 earlier this week. The largest digital asset was trading at $40,098.32 as of 11:19 AM in Singapore on Friday. It set a record high of nearly $69,000 during the pandemic-era crypto mania in 2021.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin retreats to a one-month low as ETF-led enthusiasm wanes

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bitcoin slid to the lowest since mid-December as the speculative demand for the token sparked by hype about new exchange-traded funds dissipates, leaving the cryptocurrency in the red since the start of 2024.

The largest digital asset briefly flirted with a drop below $40,000 before trading at $41,160 as of 6:30 AM Friday in Singapore, a decline of 3% in the past 24 hours. Smaller tokens like Ether, Solana and Polkadot also struggled.

Bitcoin surged 157% last year on optimism about the eventual January 11 launch of the first US exchange-traded funds to directly hold the token. Digital assets also got a tailwind from bets on looser monetary policy. Traders are now assessing how much money the ETFs attract and paring expectations for interest-rate cuts.

“This type of correction after a significant run-up is normal for Bitcoin,” said Greg Moritz, co-founder at crypto hedge fund AltTab Capital.

Nine new spot Bitcoin ETFs went live last week, including from BlackRock Inc. and Fidelity Investments. The $25 billion Grayscale Bitcoin Trust converted from a closed-ended structure into an ETF.

BlackRock’s iShares Bitcoin Trust has passed $1 billion in investor inflows. The equivalent figure for the Fidelity Wise Origin Bitcoin Fund is about $880 million. Grayscale’s Bitcoin fund, which was created in 2013, has seen about $1.6 billion in outflows since it started trading as an ETF.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin ETF trades top $4.6 billion in ground-breaking opening day

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The first US ETFs that directly hold Bitcoin got off to a strong start, with billions of dollars changing hands in a historical first day of trading for the long-sought investment vehicles.

Over $4.6 billion worth of shares traded between the almost a dozen US spot Bitcoin exchange-traded funds on Thursday. The Grayscale Bitcoin Trust, which converted into an ETF, saw about $2.3 billion in volume, according to data compiled by Bloomberg. Meantime, BlackRock’s iShares Bitcoin Trust—IBIT— saw over $1 billion change hands.

“This is definitely ground-breaking,” said Athanasios Psarofagis, an ETF analyst at Bloomberg Intelligence. “There was no doubt demand would be strong for these ETFs, but the numbers across the board are impressive.”

Still, it’s hard to compare Thursday’s activity to any other day in ETF history. Typically, only one fund that tracks a new asset class begins trading on a single day. It’s unprecedented to see over 10 nearly identical funds all begin at once. But even singling in on one ETF indicates the sheer magnitude of trading.

The Grayscale Bitcoin Trust was the most heavily traded ETF debut on record. To be sure, the product has existed in its trust structure since 2013, and had a nearly $27 billion headstart in asset size.

Trading volume doesn’t indicate buying or selling or investor inflows. Because of the way the funds settle trades, net flows into or out of the products probably won’t be known until at least Friday.

When the initial Bitcoin futures fund began trading in 2021, it saw turnover of almost $1 billion during the entire first day. At the time, the futures fund debut was the second-most heavily traded fund on record.

Psarofagis added a caveat that much of the demand may be from so called “seed” money that is pre-arranged by the fund issuers. Signs of more organic demand, like from retail investors or financial advisors, may come later on as more broker-dealers list the funds on their platforms.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Spot bitcoin ETFs may face tough battle to widen token’s appeal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Crypto enthusiasts hailed the approval of US bitcoin exchange-traded funds as the birth of a new asset class, but broadening acceptance of the famously turbulent cryptocurrency beyond its true believers could prove challenging.

A decade in the making, the ETFs offer investors access to spot bitcoin prices, avoiding the risks associated with holding bitcoin directly in a digital wallet, ranging from hacking to fraudulent behavior by crypto exchanges.

Estimates of likely first-year inflows vary widely, from $5 billion to $100 billion. Some market participants have compared the products to the SPDR Gold Shares ETF, which gave a much broader range of investors access to the precious metal when it launched in 2004 and pulled in more than $1 billion in its first three trading days.

Many of the 11 approved ETFs are expected to start trading on Thursday morning.

Cathie Wood, founder of Ark Investments, called it “a truly new asset class.”

One of the ETFs approved by the Securities and Exchange Commission was designed by Ark in tandem with 21Shares, a digital assets investment firm that already operates a crypto ETF in Britain.

“We’re not thinking about profit maximization as much as enabling more and more people to access what we think is a new asset class,” said Wood, who made her name creating actively managed ETFs that bet on so-called disruptive technologies ranging from electric vehicles to bitcoin trading.

Whether the new ETFs earn bitcoin a place at the table alongside more traditional asset classes such as stocks, bonds and commodities could well depend on how successful Wood and other issuers – including BlackRock, Fidelity and Van Eck – are in helping the broader investment community overcome its wariness about the risk factors that take up dozens of pages in each ETF’s regulatory filings.

Bitcoin’s short history has seen several dizzying rallies followed by wrenching drops amid periods of decline sometimes dubbed “crypto winter.” Scandals such as the implosion of crypto exchange FTX in 2022 have also added to investors’ wariness, though proponents have said some of the risk could be mitigated through ETFs, which are listed on tightly-regulated stock exchanges.

That volatility has heightened their appeal as primarily speculative investments, although they were originally created as an alternative to fiat currencies established by and backed by a governments.

Bitcoin, which came into existence in 2008, has a far shorter track record than other asset classes that have spawned wildly successful ETFs, such as gold. That makes it difficult for investors to determine how it will trade over multiple economic cycles.

Jeff Schwartz, president of Markov Processes International, a fintech firm that advises wealth and asset managers, drew a parallel between bitcoin and emerging markets and commodities, two asset classes that gained traction in investors’ portfolios in the 1990s and early 2000s.

Those “were asset classes far better understood by most investors than bitcoin is,” Schwartz said. Nevertheless, “allocations were capped at a very low level (at the time), out of prudence.”

Many expect the bulk of the investment community to follow suit and make only tentative forays into bitcoin ETFs. But even small allocations among a wide pool of investors could add up to billions in inflows: Standard Chartered analysts this week said the ETFs could draw $50 billion to $100 billion this year alone, potentially driving the price of bitcoin as high as $100,000.

“Despite the interest in the crypto market, investors won’t allocate a significant share of their portfolio in cryptos,” said Ruslan Lienkha, chief of markets at fintech platform YouHodler. But “even a small percentage of a portfolio specifically of institutional investors can boost crypto market capitalization.”

Allocating 1% or 2% of a portfolio to spot bitcoin ETFs “shouldn’t create too many issues or too much risk” for many investors, said Sandy Kaul, head of digital assets and industry advisory services at Franklin Templeton. She added investors are hungry for something new as “they’re worried about real estate, unsure about bonds and stocks.”

Proponents of bitcoin as an asset class also point to another much-touted property: its finite supply. The supply of 21 million bitcoins is expected to be fully mined by 2140, in theory making bitcoin resistant to inflation, a property that some investors also attribute to gold.

“Bitcoin is a truly non-inflationary asset,” analysts at Invesco, one of the firms that received ETF approval on Wednesday, said in a report last year. Investment views about Bitcoin are often centered around this idea of scarcity.

Still, it might take a lot of convincing to change the mind of skeptics such as Robert Arnott, founder and chairman of asset manager and consultancy Research Affiliates.

“Bitcoin isn’t an asset; it’s not even like currency,” said Arnott, who has studied the evolution of asset allocation and views bitcoin as closer to investments such as art and fine wine rather than stocks and bonds.

“I view it as a speculative vehicle,” he said. “There’s nothing wrong with speculative vehicles” as long as investors understand what they are getting into, Arnott added.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin-spot ETFs authorised by US SEC in Crypto’s big breakthrough

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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US regulators for the first time approved exchange-traded funds that invest directly in Bitcoin, a move heralded as a landmark event for the roughly $1.7 trillion digital-asset sector that will broaden access to the largest cryptocurrency on Wall Street and beyond.

The Securities and Exchange Commission, whose three-part mandate includes investor protection, authorized funds from industry heavyweights BlackRock, Invesco and Fidelity to smaller competitors including Valkyrie to begin trading Thursday.

The approvals also mark a rare capitulation by the SEC following opposition that lasted for more than a decade, ever since Tyler and Cameron Winklevoss first proposed a Bitcoin ETF in 2013. BlackRock Inc.’s surprise application last June, followed by an appeals court ruling that called the denial of a different application “arbitrary and capricious,” triggered a blistering rally in the cryptocurrency as speculation that US regulators would finally give their blessing to the structure.

“While we approved the listing and trading of certain spot Bitcoin ETP shares today, we did not approve or endorse Bitcoin,” SEC Chair Gary Gensler said in a statement. “Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto.”

At the crux of the SEC’s previous rulings against a spot ETF was the argument that no regulated exchange was able to adequately monitor Bitcoin trading in a way that would reliably detect fraud and manipulation. That contention was opposed by Ark, among others, which provided data showing a high correlation between cash trading and the futures contracts that trade on CME Group’s platform.

In reviewing the latest set of proposals, the SEC said it examined the correlation between spot and futures trading at a variety of time intervals and concluded prices moved in such a way that irregularities on exchanges such as Kraken and Coinbase were likely to show up in the futures.

“Because the CME’s surveillance can assist in detecting those impacts on CME bitcoin futures prices, the exchanges’ comprehensive surveillance-sharing agreement with the CME — a U.S. regulated market whose bitcoin futures market is consistently highly correlated to spot bitcoin, albeit not of “significant size” related to spot bitcoin — can be reasonably expected to assist in surveilling for fraudulent and manipulative acts and practices in the specific context of the proposals,” the order said.

The decision comes a day after a false post on the SEC’s X account claimed that the agency had approved the ETFs. The regulator subsequently said that the account had been compromised, causing the price of Bitcoin to fluctuate widely.

Bitcoin was little changed at about $46,300 following the approvals. The original cryptocurrency, which sank 64% in 2022, more than doubled in 2023 in large part because of speculation that the SEC would eventually approve ETFs that will allow investors to get exposure to the token in their traditional brokerage accounts instead of one of the crypto-native startups that have come under increasing government scrutiny following a series of sector scandals and bankruptcies.

“The approval means that both retail and institutional investors now have the ability to diversify their portfolio with crypto exposure without worrying about the complicated issues of custody,” said Campbell Harvey, finance professor at Duke University. “The ETF makes it easy to add to your portfolio.”

Crypto proponents have for years argued that a so-called spot fund that invests directly in Bitcoin would be beneficial to investors and would help bring the industry closer to the more highly regulated world of traditional finance. It also suggests a sort of milestone of maturity for the relatively nascent industry, where skirmishes with regulators came to a climax after the collapse of Sam Bankman-Fried’s FTX empire highlighted risks lurking in the industry.

The landmark decision comes after Grayscale Investments won a key victory over the SEC. A federal appeals court had overturned the rejection of Grayscale’s application to convert its Bitcoin trust into an ETF. The court called the denial “arbitrary and capricious” because the commission failed to explain its different treatment of similar products. ETFs that hold Bitcoin futures were approved in 2021.

The SEC’s loss to Grayscale was one of the reasons why the SEC approved the applications, Gensler said in Tuesday’s statement.

“Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot Bitcoin ETP shares,” Gensler said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin prices swing wildly after debunked post claimed ETFs won approval

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bitcoin dropped to around $45,000 before recovering losses late Tuesday after a debunked post on the X social-media site falsely claimed that the US Securities and Exchange Commission had approved the issuance of ETFs holding the cryptocurrency.

The agency said shortly afterward that it had not yet granted approval of spot-Bitcoin exchange-traded funds, and that the post that appeared on the regulator’s official X account was untrue. Market participants were caught off guard by the false statement, with the SEC widely expected by analysts to announce a decision Wednesday.

“That was not on my bingo card for today,” said Ophelia Snyder, co-founder and president of 21Shares, which is seeking to offer a Bitcoin ETF with ARK Investments. “I don’t think it will affect the process or what comes next. There’s no way after 10 years of work this could wrap up without any last minute drama.”

The ARK 21 Shares application must be addressed by the SEC by the end of Wednesday. Analysts expect the agency to approve several applications at that time, following a slew of last-minute adjustments to official offering statements this week.

The largest cryptocurrency recently traded at around $45,886. It had surged to as a 21-month high more than $47,000 on Tuesday as optimism grew that approval of the the long-sought ETFs was imminent.

“The entire spot Bitcoin ETF saga has been highly unusual from the beginning and so the tweet made sense in that light,” said Nate Geraci, president of The ETF Store, an advisory firm. “Just add this to the long list of surprising plot twists and turns in the 10-plus year effort to bring a spot Bitcoin ETF to market.”

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US market regulator’s “X” account compromised to falsely say Bitcoin gets ETF approval

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US Securities and Exchange Commission said it had not yet granted approval of spot-Bitcoin exchange-traded funds, and that a post that appeared on the regulator’s official “X” account was untrue.

The post, which included a fake comment purporting to be from SEC Chair Gary Gensler, briefly fueled a jump in the price of Bitcoin. Traders have been speculating for weeks that the agency could approve several of the products as soon as Wednesday.

Gensler said from his own X account that the regulator’s account had been “compromised,” an unauthorized statement was posted and that the agency hadn’t taken action.

The @SECGov twitter account was compromised, and an unauthorized tweet was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.

— Gary Gensler (@GaryGensler) January 9, 2024

About a dozen companies have applied to list ETFs backed by Bitcoin in the US. The SEC has until January 10 to take action on at least one of those applications, and crypto insiders have speculated the regulator will use that date to announce a slew of decisions at once.

There are two technical requirements that must be fulfilled before a spot-backed Bitcoin ETF can start trading. First, the SEC must sign off on so-called 19b-4 filings by the exchanges that would list the ETFs. Second, the regulator must approve the relevant S-1 forms, which are the registration applications from the would-be issuers — a list that includes BlackRock and Fidelity.

The SEC is planning to vote on the exchanges’ filings, the 19b-4s, this week, Bloomberg News has reported. The regulator may or may not take action on the issuers’ applications, the S-1s, around the same time. If the SEC grants both sets of required approvals, the ETFs could start trading as soon as the next business day.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow