A recent wave of U.S. bitcoin exchange-traded funds (ETFs) has captured significant investor attention, raising $1.9 billion within their first three days of trading. While the sustainability of this momentum remains uncertain, prominent industry players like BlackRock and Fidelity lead in attracting funds.
In their initial trading days, these nine ETFs surpassed the post-launch flows of the ProShares Bitcoin Strategy ETF, which recorded a remarkable $1.2 billion within its first three days in 2021. Similarly, the SPDR Gold Shares ETF garnered $1.13 billion during its debut in 2004.
Launched on January 11, following approval from the U.S. Securities and Exchange Commission (SEC), these ETFs fell short of the most optimistic first-day flow estimates. Analysts now await the future trajectory of funds tracking the notoriously volatile cryptocurrency and speculate on whether retail and institutional investors will sustain interest.
Despite Bitcoin experiencing an over 8% decline since January 11, the ETF launches have lived up to expectations. According to Todd Sohn. An ETF analyst at Strategas. The key question now is the longevity of this success—what will the flows look like in six months or even six years?
Bitcoin Fund has secured over $500 million
Lower fees and brand recognition emerge as critical factors driving investor interest. BlackRock’s iShares Bitcoin Trust ETF, with fees starting at 0.12%, has attracted over $700 million. While Fidelity’s Wise Origin Bitcoin Fund has secured over $500 million.
Among the nine issuers, fees range from 0.19% to 0.39% before waivers. BlackRock’s fees start at 0.12% for the first $5 billion in assets and 12 months, later increasing to 0.25%. Fidelity begins with zero fees, rising to 0.25% after July 31. These rates, below the average ETF fee of 0.54%, are seen as advantageous.
The competition extends beyond BlackRock and Fidelity, with Bitwise and the joint venture of Ark Investments and 21Shares also gaining traction. Despite fee waivers, they have attracted substantial inflows, signaling a competitive landscape.
Interestingly, the Grayscale Bitcoin Trust, with a 1.5% fee, experienced outflows this month as investors shifted to the newly launched, more cost-effective ETFs. As the industry evolves, the next challenge lies in gaining acceptance from institutional investors and investment advisers, who will determine the lasting impact of spot bitcoin ETFs in the broader financial landscape.
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In approximately six months, Bitcoin undergo a “halving,” reducing the new bitcoins awarded to miners by half. Satoshi Nakamoto introduced this event in 2009 as an anti-inflationary measure. Occurring roughly every four years, the lead-up to halvings traditionally proves the most profitable time for crypto investors. “Buying bitcoin six months before a halving and selling 18 months after has historically outperformed a ‘buy and hold’ strategy,” affirms the analyst.
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