Institutional Frenzy: Bitcoin ETFs Drive Surge in Inflows and New Applications

Institutional Frenzy: Bitcoin ETFs Drive Surge in Inflows and New Applications
The excitement surrounding Bitcoin (BTC) exchange-traded funds (ETFs) has returned, accompanied by a surge in capital inflows from institutional investors, as multiple new applications flood the market.

According to Bloomberg senior ETF analyst Eric Balchunas, the ProShares Bitcoin Strategy ETF (BITO), a Bitcoin futures fund, experienced a notable increase in inflows on 26 June. The fund witnessed its largest weekly inflow in a year, reaching $65.3 million, with total assets surpassing $1 billion.

BITO, the first BTC-linked ETF in the United States, has gained significant popularity among institutional investors. Balchunas emphasized that the fund has closely tracked Bitcoin's performance, trailing spot prices by just 1.05% annually and featuring a fee of 0.95%.

ProShares reported that the BITO fund has achieved a 59.6% gain since the beginning of 2023. Moreover, the interest in Bitcoin derivatives has risen across the market following BlackRock's filing for its Bitcoin ETF on 15 June.

Data from the Deribit crypto options exchange indicates a notable surge in Bitcoin futures open interest (OI) since the previous week, currently standing at $319 million as of 25 June. This figure represents an increase of approximately 30% compared to the corresponding period.

OI serves as a measure of the total number of outstanding futures contracts that remain unsettled.

The revival in ETF trading and the resulting boost in BTC prices have brought positive news for Grayscale, the world's largest crypto asset manager. The Grayscale Bitcoin Trust (GBTC), which had been trading at a significant discount to spot BTC prices for months, is now making progress as the gap narrows.

According to Coinglass, the Grayscale premium, or discount, stands at -31.2%. This represents an improvement from its low point of -49% in December.

While it remains uncertain whether the Securities and Exchange Commission (SEC) will approve a spot Bitcoin ETF, a new wave of applications has emerged in the wake of BlackRock's filing.

WisdomTree has filed with the SEC for a spot Bitcoin ETF for the third time, followed by Invesco, which renewed its application for a similar product just hours later.

Nate Geraci, President of ETF Store, recently shared a list of ETF issuers on Twitter that he believes are likely to file or refile for a spot Bitcoin ETF based on their past filings. Geraci highlighted First Trust, VanEck, Global X, Fidelity, and Schwab as issuers to keep an eye on, referring to Schwab as the "dark horse."

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