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Updated January 17th, 2024 at 17:58 IST

Bitcoin ETF inflows drop on second day of trading

JP Morgan's estimates, BlackRock and Fidelity have emerged as the frontrunners in fund attraction, drawing in nearly $500 million and $423 million respectively.

Reported by: Business Desk
Crypto
Crypto market upate | Image:Republic
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Bitcoin spot ETF: After an impressive debut on January 11, the influx of funds into exchange-traded funds (ETFs) linked to the spot price of bitcoin experienced a notable decline, dropping to approximately $200 million on the second day of trading, as per early estimates from JP Morgan. This decline followed the initial surge that saw these ETFs attract $629 million during their launch.

The introduction of eleven such ETFs, boasting a total asset under management of $27.9 billion, marked a significant milestone for the cryptocurrency industry in the U.S., overcoming years of regulatory challenges related to investor protection.

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According to JP Morgan's estimates, BlackRock (IBIT.O) and Fidelity (FBTC.Z) have emerged as the frontrunners in fund attraction, drawing in nearly $500 million and $423 million, respectively, in the initial two days of trading. However, detailed information regarding fund flows from other issuers like Bitwise (BITB.P), Franklin (EZBC.Z), and VanEck (HODL.Z) is still pending.

The surge in bitcoin's value by almost 60% since the end of September has been driven by expectations that ETF approval would bring in fresh capital. The appeal lies in the convenience of gaining exposure to the world's largest digital asset through a regulated exchange, eliminating the complexities of direct ownership.

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On the debut day, trading activity across all products amounted to $4.6 billion, with Grayscale, BlackRock, and Fidelity dominating the scene. The Grayscale Bitcoin Trust (GBTC.P), with the highest fees among the 11 ETF issuers at 1.5 per cent, experienced outflows of $478 million over the initial two days, according to JP Morgan. This was anticipated, given the profit-taking by early investors, considering its previous status as a closed-end fund trading at a discount to its underlying bitcoin assets.

JP Morgan's November estimate had predicted potential outflows of nearly $3 billion from the fund following the ETF conversion, and the recent data aligns with this projection.

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(With Reuters inputs)

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Published January 17th, 2024 at 17:58 IST

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