Bitcoin ETFs have caused the cryptocurrency to soar again
Published: Wednesday, Jun 12th 2024, 11:20
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Just under six months have passed since the approval of Bitcoin spot ETFs in January. So far, around 60 billion dollars have flowed into the coffers of ETF providers such as BlackRock and Co. However, concerns are also being raised in the crypto industry about the impact of the new asset classes.
The price performance to date is impressive: Six months ago, one Bitcoin was still available for around 40,000 dollars. By mid-March, the "cryptocurrency" had risen to a new all-time high of 73,737 dollars. For many market observers, this is mainly due to the Bitcoin spot ETFs that have been tradable for six months.
The Bitcoin price is currently trading slightly lower again at just over 67,400 dollars. Market observers attribute the recent losses to the publication of US inflation data expected for Wednesday (today) and the Fed's interest rate decision.
There are fears among investors that the tight monetary policy in the US could last longer than expected. Continued high interest rates would make risk assets such as Bitcoin appear less attractive than shares and bonds.
60 billion dollars
So the cryptocurrency has arrived on Wall Street. According to the latest figures in the so-called "13F filings" to the attention of the US Securities and Exchange Commission (SEC), a total of 937 professional investors held 11 billion dollars in Bitcoin spot ETFs in the first quarter of 2024 alone.
"That is 18.7 percent of the total assets managed in ETFs," writes Adrian Fritz, Head of Research at 21Shares. "In contrast, only 95 professional companies were invested in gold ETFs in the first quarter."
The term "13F filings" refers to the investments of US asset managers who manage more than 100 million dollars. It is difficult to quantify exactly how many billions are invested in Bitcoin ETFs. According to the industry portal "The Block", the total assets invested now amount to over 60 billion dollars.
"Record-breaking months"
"These figures have surprised ETF experts around the world," says Dominic Weibel, Head of Research at Bitcoin Suisse. A look at over 11,000 funds, ranked by asset value 50 trading days after launch, shows that four Bitcoin ETFs are on the top 30 list.
"The first few months of the newly launched Bitcoin spot ETFs in the US were therefore record-breaking," Weibel continues. And the ETFs are only in the "initial phase". "We expect the spot ETFs to continue to grow in the coming months and years."
Ether follows suit
The second-largest cryptocurrency by market capitalization, Ethereum, or Ether for short, has also recently entered the ETF race. The SEC recently approved the applications of several issuers, which came as a surprise to many. According to market experts, however, it could still be weeks or months before spot Ether ETFs are actually launched.
The Swiss "crypto bank" Amina (formerly Seba) believes that Ether could also experience a significant price increase: "Similar to Bitcoin spot ETFs, Ether ETFs could expand access to the crypto asset class for a broader range of investors," according to a recently published analysis.
Reservations in the industry
However, the embrace of the crypto sector by the big players on Wall Street also sometimes causes dissent in the industry. The "Bitcoin Maxis", for example, see this as a capture by traditional financial institutions and a contradiction to the decentralized system, which is based on self-custody and the autonomous control of keys. There are also fears that the Bitcoin price could be manipulated by the purchase or sale of large quantities of ETF shares.
However, most market participants see the new ETFs in the US as a welcome bridge between the traditional financial world and the crypto industry, which enables institutional investors in particular to participate in the performance of digital assets. The great success of ETFs to date is also likely to have increased providers' appetite for further products, especially as they promise high fee income.
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