Bitwise Bitcoin ETF attracts largest inflows on debut trading day

Crypto asset manager Bitwise announced on Friday that its spot Bitcoin exchange-traded fund (ETF) received $240 million in inflows, making it the most successful among the 10 similar products that commenced trading on Thursday. 

The US Securities and Exchange Commission (SEC) recently approved 11 spot Bitcoin ETFs, including offerings from BlackRock's iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF, following a decade-long struggle with the digital asset industry. 

On the first day of trading, total trading activity, including inflows and outflows, reached $4.6 billion across all products, according to LSEG data from Thursday. Although Reuters could not immediately verify Bitwise's data, Grayscale, BlackRock, and Fidelity dominated total trading, as per the LSEG data.

These ETF approvals mark a significant development for the cryptocurrency industry, posing a test for digital assets' broader acceptance as investments, particularly given their perceived risk by many professionals. 

The market closely monitors the initial days of trading to gauge inflows. Matt Hougan, Chief Investment Officer at Bitwise, expressed optimism, stating, "We think that this will become a market measured in the tens of billions of dollars." 

The ProShares Bitcoin Strategy ETF, the SEC's first-approved Bitcoin futures ETF in 2021, amassed $1 billion in assets within its initial days of trading.

Grayscale received approval to convert its existing Bitcoin trust into an ETF, instantly creating the world's largest Bitcoin ETF with over $28.6 billion in assets under management. Despite this, the product experienced outflows of $95 million on Thursday. SEC Chair Gary Gensler clarified that the approvals did not endorse Bitcoin, stressing its speculative and volatile nature.

The regulatory approval triggered intense competition among issuers for market share. Franklin Templeton responded by reducing the fee for its Bitcoin ETF to 0.19 per cent, the lowest in the market, and waiving fees on the first $10 billion in assets under management until August. 

Valkyrie, after its ETF's debut, further cut its fees to 0.25 per cent. The Valkyrie Bitcoin ETF reported $29.44 million in inflows on its first day of trading, according to the company.

Despite the success of Bitcoin ETFs, the price of Bitcoin, the world's largest cryptocurrency, experienced a 5.32 per cent decline, reaching $43,696 at the time of the report.

(With Reuters Inputs)