The US SEC’s (Securities and Exchange Commission) approval of 11 spot Bitcoin (BTC) ETFs (Exchange Traded Funds) is one of the most historic moments for the cryptocurrency industry. The excitement around the new investment vehicle is evident in its massive trade volume. According to Bloomberg analyst James Seyffart, trade volume for the Bitcoin ETF has surpassed $9.7 billion in just three days.
JUST IN: Spot #Bitcoin ETF trading volume surpasses $9.4 billion in its first three days.
— Watcher.Guru (@WatcherGuru) January 16, 2024
On the other hand, Seyffart notes that Grayscale’s Bitcoin Trust (GBTC) lost over $1 billion in the last three days. Investors may be heading out as the discount between GBTC and BTC reached an almost three-year low. The analyst says that the inflows into other BTC ETFs might not offset the outflows from GBTC.
Today is likely to be a net outflow day for the #bitcoin ETFs. Estimating ~$594 million left $GBTC for a total of $1.173 billion in outflows. Most others saw inflows but doubt its enough to offset nearly $600 mln out of $GBTC https://t.co/elD9qkyjj2
— James Seyffart (@JSeyff) January 17, 2024
However, there may be some disparity while calculating the inflows and outflows due to settlement processes.
Grayscale’s GBTC was a lucrative trade for investors who profited from the Grayscale premium, which hit a 43% high in July 2019. However, the premium became a discount in February 2021, ending the arbitrage trading.
Will spot Bitcoin ETFs lead to more capital inflow into crypto?
The spot BTC ETF will likely lead to more financial institutions getting into crypto. According to Arthur Hayes, the Chief Investment Officer at the family office of Maelstrom and former CEO of BitMEX, the BTC ETFs could potentially bring significant capital from traditional financial markets. Hayes says that spot Bitcoin ETFs could usher in fresh trading prospects by enabling traders to exploit price differentials between US benchmarks and global markets.
Moreover, profits from spot Bitcoin (BTC) ETFs could pour into other cryptocurrencies, thereby leading to a market rally. Additionally, the approval of a spot BTC ETF has opened the doors for the SEC to approve spot ETFs for other cryptocurrencies. There is a lot of talk about a spot Ethereum (ETH) ETF hitting the market later this year.
