New York: US-listed bitcoin exchange-traded funds (ETFs) saw $4.6 billion worth of shares trade hands as of Thursday afternoon, according to LSEG data, as investors jumped into the landmark products approved by the US securities regulator on Wednesday.
The products mark a watershed moment for the cryptocurrency industry that will test whether digital assets - still viewed by many professionals as risky - can gain broader acceptance as an investment.
Eleven spot bitcoin ETFs - including BlackRock's iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF, among others - began trading Thursday morning, kicking off a fierce competition for market share.
Grayscale, BlackRock and Fidelity dominated trading volumes, the LSEG data showed.
"Trading volumes have been relatively strong for new ETF products," said Todd Rosenbluth, strategist at VettaFi. "But this is a longer race than just a single day's trading.
The green light from the US Securities and Exchange Commission for the products finally came late on Wednesday, following a decade-long tussle with the crypto industry.
Some executives called out bitcoin as a high-risk investment, and Vanguard - the largest provider of mutual funds - said it had no plans to make the new batch of spot bitcoin ETFs available on its platform to its brokerage clients.
The SEC had earlier rejected all spot bitcoin ETFs on investor protection concerns. SEC Chair Gary Gensler said in a statement on Wednesday that the approvals were not an endorsement of bitcoin, calling it a "speculative, volatile asset." The ETF launches lifted the price of bitcoin up to its highest level since December 2021. It was last up 0.77% at $46,303, while the price of ether, the second-largest cryptocurrency, was up 2.79% at $2597.95.
Race for market share
The regulatory nod sparked intense competition for market share among the issuers, some of whom slashed the fees for their products well below the US ETF industry's standard even before Thursday's launch.
Fees on the new bitcoin ETFs range from 0.2% to 1.5%, with many firms also offering to waive fees entirely for a certain period or for a certain dollar volume of assets. After its ETF started trading, Valkyrie cut its fees a second time to 0.25% and waived them for the first three months.
Grayscale was approved to convert its existing bitcoin trust into an ETF on Thursday, overnight creating the world's largest bitcoin ETF with more than $28 billion in assets under management.
Estimates for how much spot bitcoin ETFs could reel in vary widely. Analysts at Bernstein estimated that flows will build up gradually to cross $10 billion in 2024, while Standard Chartered analysts this week said the ETFs could draw $50 billion to $100 billion this year alone. Other analysts have said inflows could be $55 billion over five years.