Bitcoin ETFs See High Volume on First Day of Trading

In the first day of trading of the long anticipated U.S.based spot bitcoin exchange traded funds, investors began buying and selling shares among ten SEC approved funds. Based on early volume numbers (see table below) the largest bitcoin fund, $28 billion Grayscale Bitcoin Trust, saw the most shares change hands with volume surpassing $2 billion.

The previous version of the trust, known as GBTC, was a closed-end fund that traded at a discount to net-asset value that approached 50% last year. That discrepancy narrowed in recent months as optimism rose that the Securities and Exchange Commission would end its opposition to the funds, which it had deemed too subject to bitcoin manipulation. That decision came on Wednesday, and Thursday was the first day of trading.

According to Bloomberg, $2.33 billion of the Grayscale fund’s shares traded during the day, an amount that roughly matching the combined volume of the rest of the new ETFs. Meanwhile, barely budged during the New York trading day, rising just $470 to $46,548 at 4 P.M., according to CoinGecko. This could indicate that the appearance of the new ETFs was not causing a lack of supply for any new demand linked to the funds. It’s possible that outflows from Grayscale could have freed up supply. Another potential reason Grayscale could have been targeted by investors for outflows, is the ETF’s 1.5 percent expense ratio, steep in comparison with the 20-39 basis points at the other new funds, most of which have waived or reduced their fees for several months. It is difficult to see why any rational investor would pay more than three times the fee for a fund that holds the same asset.

The Grayscale fund started the day with assets of about $28.6 billion according to its website, and in response to questions about outflows a Grayscale spokeswoman would only say “.GBTC’s AUM as of close of trading on January 11, 2024 is $28.6B. Any creations or redemptions from GBTC’s first day of trading will be reflected tomorrow.”

The other nine ETFs combined had trading volume of about $2.3 billion, led by BlackRock with about $1.04 billion Fidelity at $715 million. The two fund families may have benefited from the refusal of rival Vanguard to allow its customers to deal in the bitcoin funds. quoted a Vanguard spokesman as saying that the funds don’t help investors “build blocks of a well-balanced, long-term investment portfolio.”

Cathie Wood’s ARK 21 Shares fund saw just under $290 million of trading, the next highest amount. Wood, who manages about $14 billion overall, that the base case for the price of bitcoin was $600,000 in 2030.

Said Wood in a recent video featured on Ark Invest’s website,“Bitcoin is a risk-on asset, but it is a risk-off asset as well.”