London Stock Exchange Group (LSEG), a prominent financial data provider, has reported a significant milestone in the cryptocurrency market. Following approval from the U.S. Securities and Exchange Commission (SEC), US-listed Bitcoin exchange-traded funds (ETFs) witnessed an impressive debut, with $4.6 billion worth of shares traded on their first day.
On January 11, eleven spot Bitcoin ETFs entered the U.S. cryptocurrency market, featuring notable offerings such as BlackRock’s iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK/21Shares Bitcoin ETF. LSEG’s research highlights the strong investor interest in products from Grayscale, BlackRock, and Fidelity.
Todd Rosenbluth, Head of Research at VettaFi, noted the robust trading volumes for these new ETF products. However, he emphasized the importance of viewing this as a long-term development that extends beyond initial overnight trading.
While the SEC’s approval marks a groundbreaking event for the crypto industry, not all investment firms are embracing this new product. Vanguard, a major U.S. investment firm, and the largest mutual fund provider, has announced that it does not plan to offer clients access to spot Bitcoin ETFs on its platform.
SEC Chairman Gary Gensler expressed reservations about approving spot Bitcoin ETF funds, urging investors to remain cautious due to the inherent risks associated with Bitcoin and related products.
Despite the cautious stance from some financial institutions, analysts anticipate gradual inflows into Bitcoin ETFs, with predictions ranging from $10 billion in 2024 to the potential for attracting between $50 billion and $100 billion this year alone. Monitoring bid-ask spreads has become a key focus for investors since the introduction of Bitcoin ETFs, with narrower spreads indicating higher demand.
Jason Stoneberg from Invesco emphasized the importance of trading volume, internal organization, and the number of participants in achieving favorable bid-ask spreads. However, skepticism remains among some market participants, as the broader investment community still perceives cryptocurrencies as inherently risky.
In a related development, Vanguard faced client departures reportedly due to its decision to block access to Bitcoin ETFs, reflecting the ongoing debates and differing perspectives within the financial industry.