On Thursday, the much-anticipated debut of the first US exchange-traded funds (ETFs) directly investing in Bitcoin marked a significant validation for the cryptocurrency. This development followed the green light from the US Securities and Exchange Commission after over a decade-long push from the digital-asset industry.
Nearly a dozen funds, including those from investment giants BlackRock Inc. and Fidelity Investments, kicked off with an impressive start, amassing around $4.6 billion in shares traded on the first day. The crypto community sees these ETFs as a crucial catalyst for wider adoption among everyday investors and a potential driver for further gains.
Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, described it as “easily the biggest splash in ETF history for a first day,” surpassing expectations across the board. Bitcoin’s value soared past $49,000 at one point on Thursday, reaching levels not seen since 2021, before settling around $46,075 later in the day. While other major tokens had mixed performance, market speculators evaluated the outlook.
Highlights and What’s Next:
Trading Records: The Grayscale Bitcoin Trust saw the largest-ever first-day turnover for an ETF, with $2.3 billion exchanged. Even ETFs like BlackRock’s iShares Bitcoin Trust saw historic trading volumes, ranking as the fifth-largest ETF launch on record.
Access: The long-term success of these ETFs depends on easy investor access, which remains a challenge. Some major platforms, including Vanguard Group and Merrill Edge, are yet to offer trading in these ETFs. However, Robinhood and Charles Schwab have shown eagerness to list them.
Fee War: The battle to lower costs in the $8 trillion ETF arena began before the Bitcoin ETFs launched. Firms like BlackRock, Ark Investment Management, and Invesco reduced their fees ahead of approval. Fee waivers were used to stand out, with several ETFs offered for free for the initial six or twelve months.
What’s Next: The next stage of Wall Street adoption involves awaiting approval for options tied to these ETFs. Cboe Global Markets Inc. anticipates SEC approval for options trading later in 2024.
As the ETFs begin trading, a new filing emerged for the Grayscale Bitcoin Trust Covered Call ETF, signaling ongoing innovation in the space. Todd Sohn, an ETF strategist at Strategas, aptly notes, “Now the real work begins to see who has staying power” in this historic moment for the cryptocurrency and financial markets.
