Bitcoin ETFs Introduced by BlackRock and Fidelity Generate Significant Discussion on Wall Street

Interest in leading spot Bitcoin ETFs has surged one month post-launch, as reported by Bloomberg’s Senior ETF analyst Eric Balchunas.

Balchunas shared a series of tweets on X analyzing the figures behind the recently introduced Bitcoin investment products. BlackRock and Fidelity’s ETFs secured the top two positions, collectively attracting over $6 billion in investments since their debut on January 10.

Of course, GBTC plays a role here, and one could argue that some of the Nine’s AUM is BYOA? However, that’s not sufficient for me to dismiss this, as a significant portion of GBTC outflows were from FTX and proprietary traders arbitraging the discount, which is cash likely not intended for another BTC ETF. I think the…

— Eric Balchunas (@EricBalchunas) February 8, 2024

This indicates that the two have effectively outperformed all competition from more established ETFs like Invesco’s QQQ, which comprises shares in leading non-financial publicly traded companies, the NASDAQ 100, a roster that features Apple, Google, Microsoft, and Tesla.

Balchunas further noted that funds flowed into the Bitcoin products daily throughout the month. This is significant to highlight, as the assets-under-management (AUM) figure can be deceptive when a single investor or a small group accounts for all the inflows.

Spot Bitcoin ETFs from Bitwise and Ark Invest also appeared on the list, ranking 21st and 22nd respectively.

Grayscale has already made ETF history

Grayscale’s GBTC, which is technically the largest ETF with $21 billion AUM, did not feature on the list due to its decade-long head start. GBTC originated as a Bitcoin fund in 2013, but it wasn’t until mid-2015 that shares began trading publicly under the ticker GBTC.

Since the US Securities and Exchange Commission approved the ETFs last month, Grayscale’s has been the only one experiencing outflows: $6 billion, in fact. This is attributed to the fund trading at a discount to its underlying asset for years, owing to its closed-end structure. There was a limited number of shares, and no new shares could be issued.

The closed-end structure disappeared along with the discount after GBTC transitioned to an ETF. Many investors liquidated their positions to realize a substantial profit, including the estate of the disgraced former crypto exchange FTX, which recently sold 22 million GBTC shares and may have generated a billion from it.

Nonetheless, if Wall Street is currently embracing BlackRock and Fidelity’s Bitcoin ETFs, it is primarily due to Grayscale paving the way.

Grayscale established the Bitcoin Trust with the intention of eventually converting it into an ETF. In 2022, the SEC denied its application. Grayscale appealed to a Federal court, and on August 29, 2023, achieved a landmark victory for the industry when Judge Neomi Rao overturned the SEC’s denial, labeling it “arbitrary and capricious.”

It may have been just another Tuesday in Washington, but it marked a pivotal moment in the history of crypto and ETFs.

The post ETF History Made: BlackRock and Fidelity’s Bitcoin Launches Become the Talk of Wall Street appeared first on Cryptonews.