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Bitcoin ETFs See Moderate Success Post-Launch

2024.01.23

 

Key Takeaways

  • Bitcoin ETFs have garnered over $1 billion in investor inflows but haven’t met high market expectations.
  • Bitcoin’s price drops post-ETF launch, contradicting predictions of a significant market boost.

Initial Success of Bitcoin ETFs

The recent launch of bitcoin exchange-traded funds (ETFs) in the U.S. has marked a significant milestone in the crypto industry. ETFs from iShares (IBIT) and Fidelity Wise Origin (FBTC) have successfully attracted over $1 billion from investors in less than 10 trading days since their debut on January 11, following approval from the U.S. Securities and Exchange Commission.

 

Despite this initial influx of capital, the response from financial analysts has been somewhat reserved. Citi and Barclays analysts have observed that the ETFs’ performance, while positive, hasn’t reached the high expectations set by some market optimists. The muted response is also mirrored in bitcoin’s price, which has seen a decrease following the ETF launch, trading below $41,000, a significant drop from over $49,000 on the launch day.

Impact on Bitcoin’s Market Value

This decrease in Bitcoin’s value post-ETF launch challenges the predictions made by some investors who anticipated that these ETFs would significantly boost Bitcoin’s market value, possibly reaching $100,000 in 2024. The decline instead suggests a ‘sell the news’ effect, where the actual event of the ETF launch led to a downturn rather than the expected upsurge.

Analysis of ETF Performance

Aniket Ullal, from CFRA Research, described the launch as “a solid start, but not spectacular,” noting the difficulty in predicting demand for these new financial products. The inflow data is skewed by the conversion of the Grayscale Bitcoin Trust (GBTC) from an over-the-counter trust to an ETF, which saw more than $2 billion in outflows, partly due to its higher costs compared to its competitors.

Comparing to Other ETF Launches

Despite not meeting some expectations, the early inflows for these Bitcoin ETFs have been substantial by general ETF standards. For context, only two ETFs launched in 2023 achieved more than $1 billion in net inflows by year-end. Trading volumes have also been strong, indicating potential longevity and stability for these funds in the market.

Future Outlook for Bitcoin ETFs

The future of these Bitcoin ETFs looks promising as they gain traction and meet brokerage platform criteria that could lead to wider adoption by financial advisors. The stability of Bitcoin prices will likely play a crucial role in determining longer-term demand among asset managers and advisors.

 


More content from CoinRank:

Bitcoin Dips Below $40,000, Influencing Crypto Market Downturn

BlackRock’s Bitcoin ETF Surpasses $1 Billion AUM

Spot Bitcoin ETFs Attract $894 Million in Early Trading Days

 

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