Bitcoin ETFs See Unprecedented Trading Volume as Price Surges

Bitcoin exchange-traded funds (ETFs) have witnessed a massive surge in trading volume in the past two days, as the leading cryptocurrency rallied to a two-year high of $57,000. Among the nine U.S.-listed spot Bitcoin ETFs, BlackRock’s IBIT stood out with a record-breaking volume of over $1.3 billion on both Monday and Tuesday.

IBIT Breaks Personal Record Twice in a Row

IBIT, the spot Bitcoin ETF launched by the world’s largest asset manager BlackRock, has been attracting huge interest from investors since its debut in January. On Monday, the fund traded nearly 30 million shares, equivalent to $1.357 billion, beating its launch day volume of $1.05 billion by 30%, according to Bloomberg Intelligence ETF analyst Eric Balchunas.

The fund continued its stellar performance on Tuesday, with another 30 million shares changing hands, amounting to $950 million as of 1:22 p.m. Eastern time, Nasdaq data shows. IBIT was the fifth most-traded among all U.S.-listed ETFs during the morning hours, HODL15Capital noted on X.

IBIT is the largest and most liquid spot Bitcoin ETF in the U.S. market, with over $6 billion in assets under management (AUM) and an average daily volume of $800 million. The fund tracks the performance of Bitcoin by holding the actual cryptocurrency in a custodial account, and charges a 0.75% expense ratio.

Other Bitcoin ETFs Also See Strong Demand

IBIT was not the only Bitcoin ETF that saw high trading volume and inflows in the past two days. The combined daily volume of the nine spot Bitcoin ETFs reached $2.4 billion on Monday, slightly surpassing their debut volume, Balchunas said. Fidelity’s FBTC, which has the lowest expense ratio of 0.5%, also experienced strong trading volume and inflows.

According to BitMex Research, the spot Bitcoin ETFs attracted $520 million in net inflows on Monday, with only minor outflows from Grayscale’s incumbent GBTC. Fidelity saw the strongest inflows at roughly $243 million, followed by Ark and 21Shares’ ARKB, which attracted $130 million. IBIT came in third place at $111 million, a relatively low number for BlackRock’s fund compared to its average inflows since its debut.

The high trading volume and inflows coincided with Bitcoin’s breakout from its sideways consolidation on Monday, when the cryptocurrency soared over 10% and hit $57,000 after the U.S. market close, its highest price since Nov. 2021. Bitcoin is up 6% over the past 24 hours, outperforming the CoinDesk20 Index’s 3.5% advance.

Pent-up Demand for Spot Bitcoin ETFs

The spot Bitcoin ETFs have been a long-awaited product for many investors who want to gain exposure to the cryptocurrency without having to deal with the technical and regulatory challenges of buying and storing it directly. The U.S. Securities and Exchange Commission (SEC) finally approved the first batch of spot Bitcoin ETFs in January, after rejecting dozens of applications in the past years.

Since then, the demand for the spot Bitcoin ETFs has been overwhelming, as they offer a convenient and cost-effective way to access the Bitcoin market. MicroStrategy executive chairman and co-founder Michael Saylor said there is over a decade of pent-up demand for Bitcoin ETFs, and that they are driving the surge of capital in the asset class.

The spot Bitcoin ETFs have also opened the floodgates for a wider audience of mainstream investors, institutions, and financial advisors, who can now allocate a portion of their portfolios to Bitcoin through a familiar and regulated vehicle. The spot Bitcoin ETFs have also put pressure on GBTC, the dominant Bitcoin trust product offered by Grayscale, which trades at a significant discount to its net asset value (NAV).

Spot Ethereum ETFs Next?

Following the success of the spot Bitcoin ETFs, many investment firms have filed applications with the SEC to launch spot Ethereum ETFs in the U.S. market, as demand for such products continues to heat up. Ethereum is the second-largest cryptocurrency by market capitalization, and the backbone of the decentralized finance (DeFi) and non-fungible token (NFT) sectors.

So far, BlackRock, Fidelity, Grayscale, VanEck, Invesco, Franklin Templeton, Galaxy, as well as Cathy Wood’s Ark Invests and 21Shares, have all submitted applications for a spot Ethereum ETF. The SEC has not yet approved any of them, but analysts expect that the regulator will follow the same approach as it did with the spot Bitcoin ETFs, and grant approval to multiple applicants at once.

If the spot Ethereum ETFs are approved, they could further boost the adoption and innovation of the Ethereum network, which is undergoing a major upgrade to become more scalable, secure, and sustainable. Ethereum is currently trading at around $3,800, up 8% over the past 24 hours.