It has been a month since the first batch of spot Bitcoin exchange-traded funds (ETFs) were approved by the Securities and Exchange Commission (SEC) in the United States.
Within that timeframe, the funds have collectively amassed over $10 billion in assets under management (AUM).
The occasion marks a significant moment in the integration of Bitcoin into the traditional financial markets.
Bitcoin Spot ETFs Record $10 Billion in AUM in First Month of Trading
As per data from BitMEX Research, nine spot Bitcoin ETFs played a pivotal role in this achievement. The net flows for these ETFs reached $2.7 billion on February 9th alone.
Unsurprisingly, global investment giant BlackRock’s iShares Bitcoin Trust (IBIT) led the pack, with the fund currently managing BTC worth $4 billion.
Fidelity came in second place with its Wise Origin Bitcoin Fund (FBTC) holding $3.4 billion in Bitcoin in AUM.
ARK Invest and 21Shares’ BTC-focused fund, the ARK 21Shares Bitcoin ETF(ARKB), also managed to cross the billion-dollar threshold.
The fund holds approximately $1 billion worth of crypto assets in its portfolio.
Meanwhile, digital asset manager Grayscale saw its exchange-traded fund – Grayscale Bitcoin Trust (GBTC) – record the lowest daily volume of capital withdrawals on February 9th.
The fund, which witnessed outflows amounting to $6.3 billion since its conversion to a spot market-traded ETF in early January, recorded $51.8 million in outflows last Friday.
All 10 ETFs ended the week on a high with a net inflow of $541.5 million.
Bloomberg senior ETF analyst Eric Balchunas took to X to comment on this historic occasion.
He expected the nine Bitcoin ETFs to “get a bit weaker” as outflows from GBTC subsided.
“But they’re getting stronger,” wrote Balchunas as he highlighted the growing confidence of traditional investors in the newly established crypto-focused investment vehicles.
US Broker-Dealers are Investigating the Health of Bitcoin ETFs
Inflows to BTC exchange-traded funds are expected to increase over the next few months as trading firms complete their due diligence on the newly launched financial products.
According to a recent report by Bloomberg, independent broker-dealers like LPL Financial Holdings are examining whether the recently approved Bitcoin ETFs can be made available for nearly 19,000 independent financial advisors who collectively oversee $1.4 trillion in assets under management.
Rob Pettman, vice president of wealth management solutions at LPL Financial, said they want to see how the Bitcoin-backed funds work in the markets.
The company, regarded as one of America’s largest broker-dealers, plans to complete its due diligence on the Bitcoin ETFs in three months.
One key point LPL Financial is evaluating is the ETF’s performance.
They don’t rule out the possibility that the funds could be shut down if they perform poorly, resulting in them failing to accumulate significant assets.
Pettman told Bloomberg that they have to make sure that the Bitcoin ETFs are “durable over time”, as the funds’ failure would be a “very negative experience” for both investors and financial advisors.
In 2023 alone, 253 ETFs with an average AUM of $34 million had to be closed down in the US.
The list also included crypto-tied products, such as VanEck Digital Assets Mining ETF (DAM) and the Volt Crypto Industry Revolution ETF.
Bitcoin Spot ETFs Could Amass $10 Billion in Inflows by January 25, Predicts Analyst
Last month, during a private webinar with on-chain and market data analytics firm CryptoQuant, Bloomberg ETF analyst James Seyffart noted that the widespread adoption of Bitcoin ETFs might be slower than expected.
Nevertheless, he predicted the funds could potentially attract $10 billion in inflows within its first year of trading.
As of January 31, all the Bitcoin spot ETFs approved by the US Securities and Exchange Commission (SEC) collectively held 656,421 BTC, worth a whopping $31.6 billion at the current rate.
However, the ETF’s performances were heavily impacted by the 131,195 BTC – valued at $6.3 billion – leaving Grayscale’s GBTC since its conversion from an over-the-counter crypto product to a listed ETF last month.
On January 10, the SEC greenlit Bitcoin ETF applications from BlackRock, Fidelity, Grayscale, ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, and Valkyrie.
Bitcoin Has Potential to Replace Gold as a Risk-Off Asset, Says ARK Invest Analysts
Market analysts are confident in the future growth prospects for Bitcoin. Digital asset manager ARK Invest claims that the leading cryptocurrency has the potential to replace gold as a risk-off asset.
Analysts at the firm highlighted that in the last 7 years, Bitcoin’s price relative to that of gold has increased twenty-fold. For reference, in January 2024, 1 BTC could buy 20 troy ounces (oz) of gold, compared to 1 troy OZ in April 2017.
ARK Invest believes that this trend “should continue” as Bitcoin increases its role in the financial markets.
The asset manager predicts that as inflation cools down and real rates rise, Bitcoin should remain “anti-fragile” as banks continue to lose deposits.
At the time of writing, Bitcoin (BTC) is trading at $48,132.