Bitcoin ETF becomes the second largest ETF product in the U.S., Grayscale's selling pressure causes Bitcoin to drop below $41,000
The backlog demand for Bitcoin has played a key role in driving digital assets beyond silver.Author: Shi Yuning, Blue Whale Finance
The Bitcoin ETF has surpassed the silver ETF in the United States, becoming the second-largest single commodity ETF by assets under management. This news attracted widespread attention on January 18, 2024. This achievement came just a week after the Bitcoin ETF began trading, reflecting the rapid growth and changes in the digital currency market.
According to The Block, this shift is attributed to the enormous market demand for Bitcoin. Jag Kooner, head of derivatives at Bitfinex, stated, "The size of the Bitcoin ETF in the U.S. has surpassed that of the silver ETF, thanks to the tremendous market interest it has garnered." He added that the pent-up demand for Bitcoin has played a key role in pushing digital assets beyond silver.
Previously, silver had been the second-largest single commodity ETF by assets under management in the U.S. However, the situation has now changed. Bitcoin ETFs, including the conversion of Grayscale's GBTC trust, currently hold approximately 647,651 Bitcoins, with a total value of about $27.5 billion. According to Coinglass, the Grayscale Bitcoin Trust ETF (GBTC) currently holds about 619,000 Bitcoins. These figures indicate that Bitcoin has surpassed silver in the single commodity ETF asset class, with silver's assets under management at approximately $11.5 billion, spread across five ETFs. In contrast, U.S. funds holding gold have a total assets under management of $96.3 billion, distributed among 19 ETFs.
Market analysts point out that the trading levels of these new assets reflect strong market demand for these products and expect this to lead to increased market liquidity and stability. Reports indicate that on the fifth day of trading for these new assets, Thursday, the cumulative trading volume of the 11 funds exceeded $12 billion. Kooner anticipates that this strong interest will continue. He also noted that ETF issuers have implemented competitive fee structures, including a range of discount fees and fee waivers, which should attract more investors and potentially lead to further competitive pricing among ETF providers.
Meanwhile, Grayscale's Bitcoin ETF (GBTC) has recently experienced three consecutive days of redemptions, resulting in selling pressure of approximately 26,000 to 28,000 Bitcoins. According to SoSo Value, on January 11, 12, and 16, the redemptions of Grayscale GBTC led to a net outflow of $1.174 billion. Although this short-term selling pressure on Bitcoin spot is significant, overall, from January 11 to 16, all Bitcoin spot ETFs still brought in a net purchase of $740 million for Bitcoin. Among them, the BlackRock ETF (IBIT) saw a three-day net inflow of up to $710 million. The news of Grayscale transferring 9,000 Bitcoins to Coinbase on the 16th caused a rapid decline in Bitcoin prices.
According to Coinmarketcap, the latest price of Bitcoin is $41,203, down 3.32% today.
Additionally, the strength of the management companies for the newly approved Bitcoin spot ETFs should not be underestimated. Companies such as BlackRock (managing a total of $8.59 trillion in assets), Fidelity (managing a total of $4.5 trillion in assets), and Invesco (managing a total of $1.6 trillion in assets) are top firms in the global asset management industry. Notably, BlackRock, Vanguard, and State Street are referred to as the "Big Three," controlling the entire index fund industry in the U.S. Meanwhile, the total size of the entire cryptocurrency market is only $1.7 trillion.
