US Bitcoin ETFs Attract $4.6 Billion in Trading Volume as Market Competition Heats Up

In a landmark development, U.S.-listed bitcoin exchange-traded funds (ETFs) witnessed a robust $4.6 billion in trading as of Thursday afternoon, following the recent approval by the U.S. securities regulator. The introduction of 11 spot bitcoin ETFs, including notable offerings from BlackRock, Grayscale, and ARK, has initiated a fierce battle for market dominance. While trading volumes, particularly dominated by Grayscale, BlackRock, and Fidelity, have been robust, industry experts emphasize that this is a longer race, not just a single day's trading.

Despite the green light from the U.S. Securities and Exchange Commission (SEC), caution prevails, with some executives highlighting bitcoin's high-risk nature. Vanguard, a major mutual funds provider, has no plans to make the new spot bitcoin ETFs available on its platform, emphasizing investor protection concerns. SEC Chair Gary Gensler reiterated that the approval does not endorse bitcoin, labeling it a "speculative, volatile asset."

The ETF launches have significantly impacted the price of bitcoin, reaching its highest level since December 2021. With fees on the new bitcoin ETFs ranging from 0.2% to 1.5%, intense competition among issuers has prompted fee reductions even before Thursday's launch. Valkyrie, for instance, slashed its fees to 0.25% and waived them for the first three months.

Notably, Grayscale received approval to convert its existing bitcoin trust into an ETF, instantly becoming the world's largest bitcoin ETF with over $28 billion in assets under management. Estimates for the potential inflow into spot bitcoin ETFs vary widely, with projections ranging from $10 billion in 2024 to $50 billion to $100 billion this year alone.

As trading commenced, market participants closely monitored bid-ask spreads, emphasizing the importance of trading volume, internal plumbing, and participant involvement. However, some analysts caution that the approval's euphoria might be premature, given the prevailing perception of cryptocurrencies as risky within the broader investment community.

While cryptocurrency-related stocks initially surged, they ended the day lower, with bitcoin miners Riot Platforms and Marathon Digital dropping significantly. Despite the mixed reactions, the approval of spot bitcoin ETFs is expected to pave the way for more innovative crypto ETFs, potentially including spot ether products. Grayscale CEO Michael Sonnenshein hinted at the firm's plans to file for a covered call ETF, allowing investors to generate income from options on its spot bitcoin product.

In a separate development, Circle Internet Financial, the entity behind stablecoin USDC, revealed its confidential filing for a U.S. initial public offering. Circle oversees the issuance and governance of USDC, a cryptocurrency pegged to the U.S. dollar.