Market commentary
Since the approval of the first spot-based Bitcoin ETFs, the crypto markets have received a significant tailwind from inflows into the new funds. In the month and a half since their launch, the ETFs have attracted over $7.3 billion, with an additional $1.6 billion added in the last three days alone. The rush has caught many market participants off guard.
Bitcoin BTC/USD (daily) / Charts: TradingView
Since the beginning of the year, the price of Bitcoin (BTC) has risen +45%. Over the past seven days, it has risen +21%. A weekly close at this price level represents the largest weekly appreciation of the cryptocurrency measured in U.S. dollars: +$11,170. The FOMO (Fear Of Missing Out) moment is setting in for many as less than +10% is needed to reach a new all-time high.
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ETF inflows drive Bitcoin price
Much of the buying pressure is coming from the new Bitcoin ETFs. The launch of these products has already seen impressive volume numbers, but unlike the launch of the futures ETF at the end of 2021, inflows are accelerating significantly. Instead of a spike in volume on launch day, yesterday's turnover reached a new high of over $10 billion. BlackRock's IBIT now manages $9.14 billion, while Fidelity's FBTC is over $6.23 billion. Ark and 21Shares, as well as Bitwise, have also passed the $1 billion mark.
Bitcoin ETF Volume since 2021 / Source: Eric Balchunas
Currently, total assets under management in spot Bitcoin ETFs stand at $62.78 billion. By comparison, US gold ETFs manage just over $93 billion. Bitcoin surpassed US silver ETFs ($11 billion) on the first day thanks to the conversion of the Grayscale Bitcoin Trust. According to Eric Balchunas, senior ETF analyst at Bloomberg, the huge volume is primarily due to high demand, not arbitrage.
Financial infrastructure providers for the world's largest banks are now being forced to consider adding Bitcoin ETFs. Many investment advisors at Morgan Stanley, Bank of America, UBS and others are still unable to offer the products to their clients. The impressive billion-dollar volume driven by the rising price of bitcoin should not be underestimated.
Disclaimer
All information in this publication is provided for general information purposes only. The information provided in this publication does not constitute investment advice and is not intended as such. This publication does not constitute and is not intended as an offer, recommendation or solicitation to invest in any financial instrument, including cryptocurrencies and the like. The contents contained in the publication represent the personal opinions of the respective authors and are not suitable or intended as a basis for decision-making.
Risk notice
Investing in cryptocurrencies, is fundamentally associated with risk. The total loss of the invested capital cannot be excluded. Cryptocurrencies are very volatile and can therefore be exposed to extreme price fluctuations in a short period of time.
