The Rise of Spot Bitcoin ETFs: Winners and Losers in Q1 2024

Key Takeaways:

• The first quarter of spot bitcoin ETF trading has concluded, with the eleven SEC-approved offerings enjoying roughly $12.1 billion in total inflows.
• Blackrock’s IBIT has been the biggest winner up to this point, accumulating $13.9 billion in flows since trading began in January.
• GBTC is a key outlier with flow data, seeing $14.7 billion of outflows due to the relatively high fees associated with the offering.
• The spot bitcoin ETF inflows were also a boon to the underlying bitcoin price during the first quarter of the year, enjoying a roughly 67% increase on a year-to-date (YTD) basis.
• Going forward, Bitwise’s Matt Hougan expects the inflows into spot bitcoin ETFs to continue in the coming years as more asset managers develop their own bitcoin strategies.

Spot bitcoin exchange-traded funds (ETF) amassed net inflows of roughly $12.1 billion at the end of the first quarter, according to BitMEX Research. That’s in a little less than three months for the ETFs that first began trading on January 11.

These funds were credited for boosting demand for bitcoin and in turn the price for the cryptocurrency that shattered one record after another, crossing $73,000 for the first time ever.

How Much Money Flowed Into Spot Bitcoin ETFs?

Daily net inflows peaked at a little over $1 billion on March 12th and bottomed out at $326.2 million worth of outflows on March 20th.

Here are the cumulative Q1 2024 flows for each of the eleven spot bitcoin ETFs currently available for trade:

Up to this point, Blackrock’s iShares Bitcoin Trust (IBIT) has been the winner of the spot bitcoin ETF inflows race with roughly $13.9 billion in inflows.

“IBIT is the fastest growing ETF in the history of ETFs,” Blackrock CEO Larry Fink recently declared in an interview with Fox Business. Fidelity’s FBTC is the only other spot bitcoin ETF anywhere near the same ballpark as IBIT in terms of inflows thus far.

On the flip side of things, GBTC has been a massive loser since spot bitcoin ETF trading began, as the preexisting fund has experienced $14.7 billion in outflows. Much of these outflows are thought to be due to the relatively high fees found with GBTC, in addition to the potential for investors to prefer offerings from more reputable firms.

Recently, Grayscale filed an application to list a secondary spot bitcoin ETF under the BTC ticker, which is expected to come with lower fees. If the current trends continue, IBIT could overtake GBTC as the largest spot bitcoin ETF in the coming months.

Another point to note is that Hashdex’s DEFI ETF was originally traded as a bitcoin futures ETF and converted to a spot bitcoin ETF only on March 27. With the conversion of the DEFI ETF, all eleven spot bitcoin ETFs approved by the SEC earlier this year are trading.

What’s Next For Spot Bitcoin ETFs?

In terms of what happens next, Bitwise Chief Investment Officer Matt Hougan is convinced the flows into spot bitcoin ETFs will continue for years to come and are a sign of long-term, sustained demand. “The truth is, most professional investors still cannot buy bitcoin ETFs,” Hougan said. “That will change through a series of 100+ individual due diligence processes over the next two years.”

The underlying bitcoin price has benefited greatly from the listing of regulated spot bitcoin ETFs on exchanges as well, with the price already up 67% on the year. There is also excitement around further price gains later in the year due to the upcoming halving event and the development of various layer-two Bitcoin networks that intend to bring much of the technological innovation happening elsewhere in crypto back to the world’s largest crypto network by market cap.

Read the original article on Investopedia.