Happy Friday. The cryptocurrency industry spent months pinning its hopes on the long-awaited arrival of Bitcoin ETFs, which would help it emerge from a painful bear market and allow digital assets to take their rightful place in the world of mainstream finance. . Those ETFs finally arrived last Thursday. Were they a success then? An initial flurry of marketing spin made it difficult to tell, but some clear signs are now emerging.
Price-wise, Bitcoin has actually fallen significantly since its launch, but that doesn't mean ETFs have been a failure. The drop follows a sharp rise in cryptocurrency prices that occurred before the SEC approved the new product, so the recent drop reflects an expected "sell the news" moment. Meanwhile, the Bitcoin ETF market is said to be already more valuable than silver, and BlackRock's ETF is already making waves. more than a billion dollars itself.
More intriguing is what comes next. I spoke with Ophelia Snyder, whose 21.co helped launch the Ark Invest Bitcoin ETF, which was fourth of 11 new ETFs with $2.7 million in trading volume on Thursday, to get a better idea. of where things are going. She argued that much of the initial movement is coming from organic retail trading and that the market can expect many more inflows once financial advisors start recommending Bitcoin ETFs to their clients.
According to Snyder, these advisors can currently pick up the phone and complete a client's order for Bitcoin shares, but they need to evaluate the market before actively including them in portfolios. She expects that to happen in the coming weeks and months, which will increase demand and, of course, the price. Obviously, Snyder is not impartial on this point, but her thesis makes sense.
Another thing that is becoming evident a week into Bitcoin ETF trading is which of the 11 newly launched ETFs are gaining significant market share. While assets under management tell part of the story, that metric can also be misleading since some of the fund sizes reflect, in Snyder's words, a “bring your own assets” playbook, meaning they turned to their own capital to help fuel their launches. . That's the case with category leaders BlackRock and Fidelity and BitWise, which launched with an “initial partner” who invested heavily.
The best way to gauge the initial performance of new ETFs is by daily trading volume, and on that front, BlackRock and Fidelity are also way ahead with volumes of $17.7 million and $9.7 million Thursday. BitWise was next with $2.8 million, just ahead of Ark. Meanwhile, the other new ETFs (apart from Grayscale, which is a special case) recorded less than 10% of those volumes, raising questions about their long-term viability.
The upshot of all this is that the long-awaited Bitcoin ETFs are an early success, and if optimists like Snyder are right, this is just the beginning.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
DECENTRALIZED NEWS
bitcoin fell to its lowest level in a month, briefly falling below $40,000, as ETF mania cools and traders pocket recent gains. (Bloomberg)
The total amount of cryptocurrencies used in scams decreased in 2023 from the previous year, while stablecoins continued to eclipse Bitcoin as the go-to currency for scammers. (Chain analysis)
a veteran of LedgerPrimewhich failed after being acquired by FTX, is back with a new firm called Liquid capital whose focus is crypto projects with liquid tokens. (Fortune)
He SECONDAs expected, he decided to delay the decision on whether to approve FidelityThe application for an Ethereum ETF until March. (The block)
Robin Hood will pay $7.5 million to Massachusetts to resolve an investigation into its practices of luring novice investors with confetti and other gamification tricks, which it largely stopped in 2021.Reuters)
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