New spot ETF cash inflows less than 0.1% of bitcoin’s market cap
During the first two days of trading in the newly SEC-approved spot bitcoin ETFs, nine tickers took in approximately $1.4 billion of new cash inflows. According to Bloomberg, a single ETF, Blackrock’s IBIT, took on $497 million of new cash. Eight other ETFs, namely FBTC, BITB, ARKB, EZBC, BTCO, BRRR, HODL, and BTCW, took on $900 million of new cash.
Meanwhile, Grayscale’s Bitcoin Trust (GBTC) converted into an ETF over the weekend after experiencing $579 million in outflows on Thursday and Friday.
In total, inflows into the nine ETFs minus outflows from GBTC’s trust-turned-ETF totaled $819 million.
When the SEC reluctantly approved 11 bitcoin ETFs, some enthusiasts expected the price of bitcoin to jump. Of course, the Wall Street adage “Buy the rumor; sell the news” applied to this news event, as it usually does.
One day before the ETFs were approved, the price of bitcoin did briefly spike to over $48,625 on a fake approval tweet from a hacked SEC social media account. However, by the time the approval was actually confirmed, the price had declined and continued to sell off in a classic “sell the news” letdown.
Read more: SEC commissioner Crenshaw still skeptical of approved bitcoin ETFs
Bitcoin ETFs inflows
Initially, interest in the new spot ETFs appeared promising. Trading volumes in Grayscale’s GBTC exceeded $4.1 billion within two days while BlackRock’s IBIT attracted an additional $1.5 billion in volume. Several other ETFs attracted hundreds of millions more apiece.
Of course, some observers suggested that a considerable percentage of ETF share trading was simply arbitrage — moving shares from one exchange to another to capitalize on small price discrepancies.
Some financial institutions did not help matters. Charles Schwab published a bearish article on “key issues to know” about bitcoin ETFs. Some financial institutions like Bank of America and Edward Jones refused to sell shares to certain retail investors. Even JP Morgan, an authorized participant for the BlackRock spot bitcoin ETF, posted a warning to anyone thinking of contributing to spot bitcoin ETFs’ inflows.
Pantera Capital was one of the more welcoming institutions. Bitwise’s S-1 filing indicated that Pantera was prepared to invest up to $200 million into its proposed spot bitcoin ETF. That $200 million made up the majority of Bitwise’s $237 million of inflows into its ETF, BITB, for the first day.
So far, spot bitcoin ETFs have attracted net new cash inflows, but only a fraction of bitcoin’s market capitalization. At $819 million of net new cash inflows into spot bitcoin ETFs during the first two days of trading, that equals barely 0.1% of bitcoin’s $827 billion market cap.
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