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By Thursday afternoon, U.S.-listed Bitcoin exchange-traded funds (ETFs) had seen a significant trading volume of $4.6 billion, according to data from LSEG.
This jump occurred after the approval of these landmark products by the US securities regulator on Wednesday.
These ETFs represent a pivotal moment for the cryptocurrency industry, testing the potential of digital assets often considered risky by specialists to gain wider acceptance as investments. Eleven spots Bitcoin ETFs including BlackRock's iShares Bitcoin Trust ( IBIT.O ), Grayscale Bitcoin Trust ( GBTC.P ) and ARK 21Shares Bitcoin ETF ( ARKB.Z ) began trading on Thursday, sparking intense competition for market share.
On data on the London Stock Exchange (LSEG), Grayscale, BlackRock and Fidelity dominated trading volumes. Todd Rosenbluth, strategist at VettaFi, noted the strong trading volumes for the new ETF products, but emphasized the long-term nature of their success.
The US Securities and Exchange Commission's approval on Wednesday marked the end of a decade-long battle between regulators and the crypto industry. Despite concerns that Bitcoin is a high-risk investment, not all major players have embraced the new spot Bitcoin ETFs. Vanguard, the largest mutual fund provider, has not expressed plans to offer these ETFs on its platform.
Securities and Exchange Commission (SEC) Chairman Gary Gensler in a statement specify, that this recent decision does not signify an endorsement of Bitcoin, highlighting its speculative and volatile nature. The launch of the ETF sent Bitcoin prices to their highest level since December 2021.
The competitive environment for market share intensified as issuers cut fees, with ranges ranging from 0.2% to 1.5%. Valkyrie, for example, reduced its fees to 0.25% and waived them for the first three months after trading.
Grayscale's approval to convert its existing Bitcoin trust into an ETF immediately created the world's largest Bitcoin ETF with over $28 billion in assets under management. Estimates of potential inflows for spot Bitcoin ETFs vary widely, with some predicting inflows to exceed $10 billion in 2024 and others suggesting they will reach $50-100 billion this year alone.
Despite the enthusiasm surrounding the endorsement, some analysts remain cautious, citing the broader investment community's perception of cryptocurrencies as risky. Bid/ask spreads, trading volume and the number of participants became focal points of scrutiny as ETFs began trading on Thursday.