Image credits: Jirapong Manustrong/Getty Images
The price of bitcoin hit $50,000 today, a month after the U.S. Securities and Exchange Commission approved 11 applications for bitcoin spot ETFs.
Issuers of these ETFs have seen demand skyrocket beyond initial forecasts of a few billion. The assets under management of these issuers total approximately $28.35 billion, representing a market capitalization of $39.8 billion, according to Blockworks data. The 24-hour trading volume was $1.38 billion.
Leading the spot bitcoin ETF pack is Grayscale Bitcoin Trust at $20.27 billion, followed by BlackRock’s iShares Bitcoin Trust at $3.31 billion and Fidelity’s Wise Origin Bitcoin Trust at $2.75 billion .
“Inflows and sustained volumes are higher than expected,” said Matt Hougan, chief investment officer at Bitwise Asset Management. “The fact that there were not just inflows from day one, but strong positive inflows in 18 of the first 19 days is really gratifying. This makes me extremely optimistic about the price development of Bitcoin and its importance in the world.
Bitwise manages the Bitwise Bitcoin ETP, currently the fourth largest spot Bitcoin ETF by market capitalization. But the road to get there hasn’t been easy. In fact, Bitwise held more than 20,000 meetings last year with financial advisors in preparation for the planned approval, Hougan said.
“It was nerve-wracking to launch, even though we’re not BlackRock, we’re not new to this. (But) we provide crypto asset funds, so we had to be relevant,” Hougan said. He now believes that ETFs have reached escape velocity and are “large enough to be economically sustainable.”
Bitwise’s fee, 0.20%, is the second lowest of the bunch, and Hougan believes it’s a “pretty good deal” in an effort to be competitive. But if his fund grew extremely large, he said he didn’t know if that rate would stay.
“For now, we like our position.”
Hougan also believes that demand will continue to increase as more national account platforms come online and inbound interest from larger institutions increases. “It’s not like they’re buying $100 million worth of bitcoin today, but there are significant inflows and meetings with platforms that have billions of dollars in assets.”
A month after receiving approvals, Hougan believes spot bitcoin ETFs will hold the title of “biggest ETF launch ever.”
“Even after working in the ETF industry for 15 years, this is unlike anything I’ve ever seen…it’s not just a little bigger; it’s much bigger.
Over the next 11 months, Hougan is optimistic that volumes will continue to increase due to the passage of time and the price of Bitcoin driving demand. The natural audience for this product takes time to learn and make decisions and national accounts take time to improve them, he added.
“I think it will be an uptick, a plateau, a reacceleration,” Hougan said. “I don’t think demand will slow down over the next 18 months. I expect these ETFs to set records.
As for what comes next, Bitwise leaves the door open to other products.
“We don’t have a filing, but we’re certainly thinking about Ethereum (spot ETF) and you can imagine we’re thinking about other things you can do with Bitcoin and Ethereum,” Hougan said. “We have entered the ETF era and we have proven that investors want to access cryptocurrencies through ETFs. We will supply these products wherever possible under regulations.
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