5 key talking points as spot bitcoin ETFs enter second day of trading

Spot bitcoin ETFs saw their first day of trading on Thursday, with the most notable story being the $4.5 billion in trading volume — suggesting a healthy uptake. 

As day two is fast approaching, we take a look at what we learned from yesterday and consider how today might fare.

Thursday’s strong trading volumes

Spot bitcoin ETFs saw a healthy $4.5 billion in trading volume on Thursday, with volumes largely concentrated among a select few of the ETFs.

Grayscale saw the largest trading volume of $2.2 billion, although it had an advantage in pre-existing assets under management. BlackRock’s ETF was in second place with $1 billion of trading volume, while Fidelity was third with $680 million.

In total, five ETFs each saw more than $100 million of trading volume, while six fell short. Three ETFs saw less than $10 million in trading volume each.

"By all metrics: volume, [number] of trades, flows, media coverage it was smashing success, historical," said Bloomberg senior ETF analyst Eric Balchunas on X. "And that was despite limited platform availability. Just relax and look at this as a multi-year process."

The wave of interest carried along to futures-based bitcoin ETFs, with the ProShares Bitcoin BTC +0.013% Strategy ETF (BITO) seeing a large increase in volume.

“$BITO smashed it's all time volume record in this historic day with $2b traded.. perhaps some is redemptions but I think more its that $BITO's liquidity will serve purpose in [market] maker for a while,” said Balchunas.

Early data on the spot bitcoin ETF inflows

While trading volumes were provided in real-time, data on the amount of inflows to these funds has been less forthcoming. 

According to BitMEX Research, preliminary data shows that there was at least $400 million of inflows into some of these funds. It said BlackRock saw $111 million of inflows, while Fidelity saw $227 million. However, this data excluded multiple ETFs and is subject to change. 

Balchunas estimated that the totals will be around $650 million of inflows for the nine new ETFs, excluding Grayscale and Hashdex. It's worth noting that Grayscale could see more outflows than inflows, which could reduce the overall number.

On Thursday, JPMorgan opined that these spot bitcoin ETFs are not anticipated to bring in a significant amount of fresh capital. Instead, they may shift up to $36 billion in inflows from existing crypto instruments, analysts said.

The role that retail is playing

While spot bitcoin ETF products are suitable for institutional investors, they are also widely available to retail investors.

Balchunas noted that there were 700,000 individual trades on the spot bitcoin ETFs, which he said was twice as high as the Invesco QQQ Trust Series 1 ETF, which sees much bigger trading volume. He said this suggests there’s a lot more grassroots action versus large seed investments than he expected. 

Balchunas added that trades being on the small size suggests a “retail stampede” out of the Grayscale Bitcoin Trust.

The ability for retail traders to access these products has been helped along by trading apps such as Robinhood, which is focused on younger and more novice investors. In contrast, Vanguard, a more traditional investment advisor, is refusing to add support for spot bitcoin ETFs and claims it has no plans to support any crypto products.

A springboard for more ETF-based products

With spot bitcoin ETFs approved and trading, the next question is what other products will be built on top of them. 

We already have a pitch for one such product. On Thursday, Grayscale filed for a so-called covered call ETF that seeks to generate income from a position in GBTC.

"The Grayscale Bitcoin Trust Covered Call ETF seeks to provide and deliver current income while also providing participation in the price return of Grayscale Bitcoin Trust," according to a Form N-1A filed Thursday afternoon. 

The fund will not invest in digital assets directly, according to the filing.

"And so it begins…," Nate Geraci, president of The ETF Store, said in a post on X. "Actively managed exposure to GBTC & buys/sells call & put options that use GBTC as reference asset. Going to see all variations of spot bitcoin ETFs."

“The ETF Spaghetti Cannon is officially in effect. These huge first day numbers are going to inspire all kinds of product variations to get thrown at the wall..” added Balchunas.

The impact on crypto equities

Bitcoin-related equities — including Coinbase, MicroStrategy and mining stocks — tumbled in market trading yesterday following the launch of the ETFs.

Bitcoin miners Riot Platforms and Marathon Digital were hit hardest — falling 16% and 13%, respectively — while Coinbase slid 7% and MicroStrategy by 5%.

Bitcoin's price has also struggled to gain momentum following the products going live, giving credence to the theory that they were more of a sell-the-news event. That's unless the ETFs generate enough inflows to counteract this movement.

Update: The article originally cited CryptoQuant data that said Coinbase had seen $6.5 billion in OTC trades. Coinbase said that the data was incorrect and the wallet in question did not belong to Coinbase. The section was replaced with a note on the ETF's impacts on crypto equities.