US-listed bitcoin exchange-traded funds (ETFs) experienced a robust start, with a staggering $4.6 billion worth of shares traded on the first day, as reported by LSEG data.
The launch of eleven spot bitcoin ETFs, including offerings from major players like BlackRock, Grayscale, and ARK, marked a pivotal moment for the cryptocurrency industry.
According to Reuters, Grayscale, BlackRock, and Fidelity emerged as key players dominating the trading volumes.
While the initial trading volumes have been strong, industry experts emphasise the long-term perspective, acknowledging that this is a “longer race than just a single day’s trading,” as noted by Todd Rosenbluth, a strategist at VettaFi.
The green light from the US Securities and Exchange Commission (SEC) came after a decade-long struggle with the crypto industry.
Despite the regulatory approval, SEC Chair Gary Gensler cautioned that this move did not constitute an endorsement of bitcoin.
The regulatory approval of bitcoin ETFs triggered a surge in competition among issuers, leading to the slashing of fees to gain an edge in market share.
Fees for the new ETFs range from 0.2 per cent to 1.5 per cent, with several firms waiving fees entirely for an initial period or specific asset thresholds.
Grayscale, already a major player in the crypto space, received approval to convert its existing bitcoin trust into an ETF, instantly creating the world’s largest bitcoin ETF with over $28 billion in assets under management.
Despite the optimism surrounding the approval, not all traditional financial institutions are quick to embrace cryptocurrencies.
Vanguard, the largest provider of mutual funds, expressed no plans to make the new spot bitcoin ETFs available on its platform to brokerage clients. The scepticism extends beyond individual investors, with Sharmin Mossavar-Rahmani, CIO of Wealth Management at Goldman Sachs, stating that cryptocurrencies have no place in an investment portfolio.
While crypto-related stocks initially climbed, they ended the day lower, indicating lingering wariness within the broader investment community.
The debut of bitcoin ETFs significantly impacted the cryptocurrency market, with the price of bitcoin reaching its highest level since December 2021.
Bitcoin was up 0.77 per cent at $46,303, while the second-largest cryptocurrency, ether, increased by 2.79 per cent to $2597.95.
The approval of these ETFs is expected to pave the way for more innovative crypto investment products, including spot ether products.
Grayscale CEO Michael Sonnenshein outlined plans for a covered call ETF, providing investors with options to generate income from its spot bitcoin product.
(With inputs from Reuters)
