Mr Viral
October 14 saw the highest single-day inflows for Bitcoin ($BTC) exchange-traded funds (ETFs) since summer ($555.86M).
Industry experts like Nate Geraci believe the bulk of the inflows come from institutions, not retail investors.
In contrast to $BTC ETFs, Ethereum ($ETH) ETFs face challenges in the US market. However, Australia’s launch of its first $ETH ETF demonstrates growing international interest.
Yesterday, $BTC ETFs recorded $555.86M in net inflows, the largest since early June. ETF Store President Nate Geraci noted cumulative 10-month $BTC ETF inflows will soon reach $20B and called October 14 a ‘monster day.’
$BTC hitting $66K for the first time since September 27 could be one reason for such demand. But Geraci believes inflows come from institutions, not ‘degen retail’ investors.
Let’s zoom in on crypto ETF performance in the US and beyond.
BlackRock and Fidelity Dominate $BTC ETF Market
Out of the 12 spot $BTC ETFs trading on US stock exchanges, 10 saw multimillion net inflows on October 12.
Fidelity led the pack with nearly $240M inflows, twice that of Bitwise. BlackRock recorded nearly $80M inflows, while Ark & 21Shares a little less than $70M.
Franklin, Invesco, and Valkyrie all had under $10M net inflows. The two smallest funds, Wisdom Tree and Hashdex saw zero investment.
BlackRock’s IBIT ETF tops the list with the largest cumulative net inflows of $21.78B, followed by Fidelity’s FBTC ETF with $10.22B net inflows.
Grayscale’s GBTC stands out as the only $BTC ETF with a negative cumulative net flow (–$20.15B). It may be that high sponsor fees coupled with an above-average price deter investors, forcing Grayscale to sell off its $BTC holdings.
In March, Grayscale held nearly $25M in net assets. The fund had to reduce its holdings to $14.51B to meet redemption requests.
$BTC ETFs ‘Blows Away Every Estimate’
Earlier this year, BlackRock CEO Larry Fink rightfully called IBIT the fastest-growing ETF to ever exist. He added that he’s bullish on $BTC in the long term.
In BlackRock’s Q3 earnings call, Fink recognizes that $BTC is an asset class in itself and argues its adoption isn’t a matter of regulation. Instead, policymakers and industry players should focus on liquidity and transparency.
Fink further compares crypto to the mortgage market, noting that better analytics and data accelerated its expansion. He believes digital assets will become as big as the entire US housing sector, now estimated at $50T.
Fink and Geraci both highlight that no one expected such explosive demand, both from retail and institutional investors.
Simply ridiculous & blows away every pre-launch demand estimate.Nate Geraci
Hang In There, Grayscale
$BTC ETFs have been doing well since launch. However, the same can’t be said for $ETH ETFs.
The cumulative net outflow of $541.82M suggests institutional investors lack confidence in $ETH despite its mature ecosystem and bullish trend.
Grayscale’s ETHE product drowned out the other eight funds’ inflows with $2.98B cumulative outflows.
The reason is simple: launched in 2017 as a trust, ETHE was initially a locked-in investment. In July, Grayscale gained regulatory approval for investors to redeem their assets.
At the time, Grayscale held approximately $10B in $ETH. Within a week, investors withdrew over $2B from the trust, and it hasn’t recovered since.
Another reason for poor $ETH ETF performance is the lack of staking yield available with direct $ETH exposure. Why miss out on 3.5% APY and pay a sponsor fee at the same time?
On the other hand, BlackRock’s ETHA product saw solid interest from institutional investors. Yesterday’s $14.31M inflows brought the cumulative flows to $1.22B, nearly three times that of Fidelity’s FETH.
Australia Launches Its First $ETH ETF
The lackluster demand for $ETH ETFs in the US doesn’t discourage other countries from launching their crypto exchange-traded products.
Today, Australia’s Monochrome Asset Management introduced the country’s first $ETH ETF under the ticker IETH. The fund manages $176.6K worth of assets and charges a 0.5% sponsor fee.
Crypto security firm BitGo and exchange Gemini act as custodians and are responsible for the assets’ safety.
In August, Monochrome launched Australia’s first $BTC ETF (IBTC), which now holds over $15.9M in assets. One-month flows into IBTC topped $1.7M.
While $BTC ETFs are thriving, US $ETH ETFs are having a rough time. Yet, their fate might be different in Australia if Monochrome manages to demonstrate crypto ETF appeal to institutional investors.
As for Grayscale, Fink has hinted at the way to recovery. Increasing liquidity and lowering fees are the only salvation for GBTC and ETHE.
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