Sudden Surge in Bitcoin Spot ETF Trading Volume

During the initial three days on the market, spot Bitcoin ETFs recorded a cumulative trading volume of around $10 billion, maintaining Grayscale Investments and BlackRock as frontrunners in this sector.

Grayscale’s recently transformed Bitcoin Trust ETF (GBTC) reported Tuesday’s trading volumes at approximately 25 million shares, equivalent to $970 million, based on data from Yahoo Finance analyzed by Blockworks. This followed trading volumes of $2.3 billion and $1.8 billion on Thursday and Friday, respectively.

Despite the substantial trading activity, the elevated volumes for GBTC did not indicate a net influx of funds. According to a CoinShares report released on Monday, the trust experienced net outflows of $579 million last week. Although recently converted to an ETF, GBTC had its origins in 2013 and currently manages approximately $27 billion in assets.

Industry analysts, as reported by Blockworks last week, anticipated continued outflows for GBTC over time, citing its comparatively high fee of 1.5% compared to competitors.

On the other hand, BlackRock’s iShares Bitcoin Trust (IBIT) recorded trading volumes of nearly 15 million shares, amounting to approximately $370 million on Tuesday. Simultaneously, the Fidelity Wise Origin Bitcoin Fund (FBTC) saw around 8.2 million shares, valued at approximately $310 million, traded during the day.

Bloomberg Intelligence analyst Eric Balchunas, in a recent post, projected that BlackRock’s IBIT is poised to outpace GBTC as the leading fund in terms of liquidity. Industry experts emphasize liquidity—characterized by narrower bid-ask spreads and the ability to execute large trades with minimal price impact—as a pivotal factor influencing investors’ choices in selecting a spot Bitcoin ETF.

Ark Invest and 21Shares, alongside rival firm Bitwise, reported Tuesday trading volumes of approximately $124 million and $52 million, respectively, for their spot Bitcoin ETFs. Conversely, offerings from Invesco, VanEck, Franklin Templeton, Valkyrie, and WisdomTree each saw volumes of $10 million or less.

Despite Bitwise initially leading in net flows for spot Bitcoin ETFs, traditional financial giants BlackRock and Fidelity surpassed the crypto-focused firm after the second day, according to Bloomberg Intelligence data.

Ophelia Snyder, President of 21Shares, highlighted that the initial trading volumes indicate pent-up demand and anticipates a “second wave of activity in the coming weeks and months as this becomes more mainstream.” Snyder cautioned against a short-term focus on fund flows, emphasizing that the gradual increase in adoption over time is more significant.