ETF shares traded in billions of dollars
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Investors reacted positively to the start of exchange trading in the first US spot Bitcoin (BTC) ETF. The rate of the leading cryptocurrency rose to $49 thousand, updating a two-year high, and remained above $46 thousand for most of the day. The trading volume of ETF shares amounted to billions of dollars. At the same time, in the short term, experts expect increased volatility in the cryptocurrency market.
Trading in 11 spot Bitcoin exchange-traded funds (ETFs), which the industry has been anticipating for several years, began on January 11 on three major US exchanges: NYSE (Bitwise, Grayscale, Hashdex funds), NASDAQ (BlackRock, Valkyrie) and CBOE (ARK/21Shares, Fidelity , Franklin Templeton, Invesco, VanEck, WisdomTree). Within the first five minutes, the volume of transactions exceeded $1 billion, and by 19:00 Moscow time, the volume of the most popular ETFs BlackRock, Grayscale and Fidelity was more than $3 billion.
“Standard Chatered predicted that spot ETFs could attract up to $100 billion from institutional investors by the end of 2024,” says Gleb Kostarev, former head of Asia and Eastern Europe at Binance.
A spot fund involves physical ownership of Bitcoin. Their quotes track the price of BTC, inviting a wide range of investors to participate in the movement of its spot market rate. Previously, similar funds, such as the Grayscale Bitcoin Trust, were presented on the over-the-counter market, but they were available to a limited number of investors.
The launch of the first ETFs directly affected the performance of the entire crypto market. According to Coinmarkecap.com, its capitalization reached $1.84 trillion, the highest since June 2022. Already against the backdrop of the SEC’s approval of fund rules on January 10, the bitcoin rate reached $47.7 thousand. The price rose in anticipation of SEC approval on Monday (see “Kommersant” dated January 9), and after the decision to approve the ETF, the price even dropped a little, says Oleg Novikov, investment director at Astero Falcon.
After the start of trading, quotes approached $49 thousand, updating the maximum since December 28, 2021.
As a result, even taking into account the correction, the Bitcoin rate remained above $46 thousand. BTC trading volume on Coinbase reached $7.7 billion, this is the second highest figure in history. The platform provides custodial services to eight of the 11 ETF issuers. According to Gleb Kostarev, Coinbase is one of the beneficiaries of the launch of new ETFs.
However, the main effect of the Bitcoin spot ETF’s approval has already been factored into the price of Bitcoin, which has been rising since last fall (see “Kommersant” dated October 23, 2023), notes CommEX regional director Anton Toroptsev. In two and a half months, the BTC rate increased by more than 75%.
The main short-term beneficiary of the news was the second cryptocurrency – ether (ETH).
Its quotes, according to Coinmarkecap.com, rose by more than 14%. It is expected that the developed infrastructure of the ETH network (size, high liquidity of the currency and the presence of active futures contracts) makes it the next contender on the list for the approval of physical ETFs, explains Mr. Novikov.
Quotes of other cryptocurrencies also showed confident growth: XRP, Cardano, Dogecoin, Polkadot.
The emergence of several Bitcoin ETFs at once indicates growing institutional interest in cryptocurrencies, says OKX commercial director Lennix Lai. In the long term, in his opinion, this will promote capital inflows. However, in the short term, the expert expects an increase in the volatility of the cryptocurrency market.
In addition, against the backdrop of continued high inflation in the United States, the risks of stagflation (economic stagnation and high inflation) are increasing while the key rate remains high, notes Mr. Toroptsev. In his opinion, bitcoin can be used by investors to hedge inflation risks and maximize the profitability of their investment portfolios.
The next significant event for the crypto market will be the halving on the Bitcoin network in the spring. Traditionally, according to Anton Toroptsev, this event is accompanied by an increase in the rate of the leading cryptocurrency, which reaches its peak on the horizon 12–18 months after the halving.
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