The nine recently launched spot Bitcoin ETFs (exchange-traded funds) have accumulated a staggering 300,000 Bitcoin valued at $17 billion within a mere two months since their introduction to the public on Jan. 11. The swift rise in adoption underscores a burgeoning interest in cryptocurrency investment vehicles among institutional and retail investors alike.
The collective Bitcoin holdings of these nine spot ETFs now constitute approximately 1.5% of the total supply of Bitcoin, which stands at 21 million BTC. Amid this surge in demand and the finite nature of Bitcoin’s supply, the price of BTC soared to a new yearly peak, surpassing $57,000 on Feb. 27. Notably, Bitcoin is now only 20% shy of its all-time high of nearly $69,000, and its market capitalization has exceeded $1.1 trillion.
Bitcoin ETFS Continue to Attract Investors
The momentum of spot Bitcoin ETFs shows no signs of waning, as evidenced by a net inflow of over half a billion dollars on Monday, Feb. 26. Furthermore, these ETFs recorded their highest trading volume day to date, with transactions totaling $2.4 billion, surpassing the previous record set on their inaugural trading day.
Another thing about $IBIT volume that's notable is the amt of pre-market activity.. check this out, it's already seen $80m traded.. only 5 ETFs have seen more activity ahead of mkt open. Unprecedented for 2mo-old ETF. $BITO in 9th place makes me think lot of arb volume going on. pic.twitter.com/cqa6ocbN0b — Eric Balchunas (@EricBalchunas) February 27, 2024
Leading the pack in trading volume is BlackRock’s iShares Bitcoin Trust, with transactions totaling $1.29 billion, closely followed by Fidelity’s Wise Origin Bitcoin Fund, which recorded $576 million in trading volume. Concurrently, Grayscale’s Bitcoin Trust (GBTC), the sole fund experiencing continuous net outflows since its launch, witnessed its lowest outflow day, with a mere $22 million leaving the fund. This marks the third consecutive trading day of diminishing net outflows for GBTC.
The decline in outflows from GBTC, which saw withdrawals of $5.64 billion by the end of January, suggests a shifting trend in investor sentiment. February has seen a reduction in outflows, totaling $2 billion thus far, resulting in a cumulative outflow of $7.6 billion since the fund’s conversion.
JPMorgan analysts just flipped their view on bitcoin, Coinbase and what they once called "underwhelming" ETF flows.. https://t.co/8wpNCSTiMQ — Eric Balchunas (@EricBalchunas) February 27, 2024
The sustained net inflows into spot Bitcoin ETFs, coupled with the decline in outflows from GBTC, signal robust market demand for these investment vehicles. This heightened interest could exert further upward pressure on Bitcoin’s price, particularly as the cryptocurrency approaches its halving event, slated to occur in less than two months.
Currently, miners add a total of 900 new BTC to the daily supply. However, spot Bitcoin ETFs are witnessing net inflows of approximately 8,000–9,000 BTC on each trading day, effectively reducing the available supply. This dynamic imbalance between supply and demand bodes well for Bitcoin’s price trajectory, reinforcing the bullish sentiment surrounding the leading cryptocurrency.
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