Bitcoin ETFs have nearly hit $50 billion assets under management and have tipped the crypto market into an exciting period of growth.
Since the ten new (and one converted) Bitcoin Spot ETFs were approved by the SEC, ETFs have dominated the crypto market. Vetle Lunde, a senior analyst at K33 Research, projected on X that the "newborn nine" will soon overtake the Grayscale Bitcoin Trust (GBTC) in Bitcoin holdings.
A quick note to clarify that the “new nine” refers to the 11 spot Bitcoin ETFs that were approved to trade minus GBTC, which already existed and was converted into an ETF, and Hashdex, which got its application approved but doesn’t currently issue a spot Bitcoin ETF.
Launched in 2013, GBTC is Grayscale's flagship Bitcoin fund and, prior to the SEC approval of spot ETFs, was one of the only ways to invest in BTC through a traditional investment vehicle. The fund has been the world's largest Bitcoin fund for years.
Bitcoin ETFs Granted SEC Approval in Historic Action
In a historic move, the U.S. Securities and Exchange Commission (SEC) has approved a rule change that would allow the first spot Bitcoin exchange-traded funds (ETFs) to begin trading. The approval is a huge milestone in the cryptocurrency industry as it comes after nearly a decade of persistent efforts and numerous rejections from the SEC. Initially, the rule change document appeared only briefly on the regulator's website before disappearing, leading to further confusion following yesterday's f...
The "newborn nine" tipping this legacy fund shows a clear appetite for traditional crypto investment options.
"For those with exposure to Bitcoin, it has been an absolute riot." Tom McClean, Senior Researcher at Vega Protocol, told Decrypt. "We’re seeing the most exciting market activity ever, and millions of investors are reaping the rewards."
The increased demand for BTC is contributing to the scarcity narrative that is growing within crypto right now.
"Bitcoin is getting more scarce because there will only ever be 21 million BTC in existence. Sadly, some of these will get lost because of forgotten passwords or damaged storage devices, which will continue to contribute to its scarcity." David Kemmerer Co-Founder and CEO of CoinLedger said. "The upcoming halving will further drive this scarcity and reduce the rate at which the new Bitcoin enters circulation."
With these scarcity pressures mounting on the crypto market, ETFs are seeing more traditional demand for BTC than ever before.
"[Bitcoin ETFs are] making it easier for more capital to flow into the asset," McClean said. "As more investors allocate funds to Bitcoin via ETFs, the available supply on exchanges and in circulation may decrease, potentially putting upward pressure on the price."
BlackRock's Bitcoin ETF Added $778 Million in BTC Amid All-Time High
Bitcoin had a big, wild day on Tuesday, setting a new all-time high price above $69,000 before crashing below $61,000. Even so, the buzz around and ahead of the new peak pushed Bitcoin ETF mania to new heights—and BlackRock snatched up a huge amount of BTC to meet the growing hype. BlackRock’s iShares Bitcoin ETF (IBIT) saw inflows of $778.3 million worth of Bitcoin, according to data from BitMEX Research. BitMEX reports that BlackRock added 12,447.3 BTC, resulting in an average price of just ab...
Unfortunately, though, this doesn't come without a downside.
Many crypto maximalists will believe that investing in BTC via a centralized authoritative body, isn't why Bitcoin was created in the first place.
"Bitcoin's original vision of a peer-to-peer electronic cash system has taken a backseat to its new role as digital gold and an inflation hedge," McClean explained. "It has also shifted focus away from the long-term benefits of decentralization. For those who believe in a more open and accessible financial system, this trend is concerning."
The newborn nine challenging Grayscale's long-held dominance in the crypto fund market which has reduced centralization in one sense. But it has also resulted in 4% of Bitcoin's total supply being wrapped up in ETFs—just 1% less than Coinbase held last year.
"Having 4% of Bitcoin's supply wrapped up in ETFs is a notable amount, but I don't necessarily view it as unhealthy from a decentralization standpoint." McClean said, "As long as individuals have the freedom to choose between self-custody and ETFs, and the majority of Bitcoin remains in the hands of individual holders, the decentralized nature of the network is preserved."
Edited by Stacy Elliott.
