The price of bitcoin hit $50,000 today, a month after the U.S. Securities and Exchange Commission approved 11 applications for spot bitcoin ETFs.
The issuers of those ETFs have seen demand skyrocket beyond initial predictions of a few billion. Assets under management at these issuers total around $28.35 billion, making for a market cap of $39.8 billion, according to Blockworks data. Trading volume across 24 hours was $1.38 billion.
Leading the spot bitcoin ETF pack is Grayscale Bitcoin Trust at $20.27 billion, followed by BlackRock’s iShares Bitcoin Trust at $3.31 billion and Fidelity’s Wise Origin Bitcoin Trust at $2.75 billion.
“The sustained inflows and volumes are higher than I anticipated,” said Matt Hougan, chief investment officer at Bitwise Asset Management. “The fact that there haven’t been just day-one flows, but strong positive inflows in 18 of the first 19 days is really gratifying. It makes me extremely optimistic on where bitcoin’s price is going, and its importance in the world.”
Bitwise runs the Bitwise Bitcoin ETP, currently the fourth-largest spot bitcoin ETF by market cap. But the road to this point wasn’t easy. In fact, Bitwise took over 20,000 meetings last year with financial advisors in preparation for the anticipated approval, Hougan said.
“It was nerve-wracking to launch, while we’re not BlackRock, we’re not new to this space. [But] we provide crypto asset funds so we needed to be relevant,” Hougan said. Now, he believes ETFs have reached escape velocity and are “big enough to be sustainable from an economic perspective.”
Bitwise’s fee, 0.20%, is the second-lowest of the lot, and Hougan believes it’s a “pretty good deal” in an effort to be competitive. But if its fund becomes extremely large, he said he did not know if that rate will stick.
“Right now, we like our position.”
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Hougan also believes that demand will continue to rise as more national account platforms come online and inbound interest from large institutions increases. “It’s not like they’re buying $100 million of bitcoin today, but there’s significant inbound and meetings with platforms that have billions of dollars in assets.”
A month after the approvals were handed down, Hougan thinks spot bitcoin ETFs will hold the title for the “biggest ETF launch of all time.”
“Even after being in the ETF industry for 15 years, it’s unlike anything I’ve ever seen…it’s not just a little bigger; it’s much bigger.”
https://techcrunch.com/2024/01/10/grayscale-ceo-spot-bitcoin-etf/
In the next 11 months, Hougan is optimistic that volumes will continue to increase due to the passage of time and bitcoin’s price spurring demand. The natural audience for this product takes time to learn and make decisions and national accounts take time to improve them, he added.
“I think it’ll be up, plateau, re-acceleration,” Hougan said. “I don’t think demand is slowing down for the next 18 months. I expect these ETFs to set records.”
As for what’s next, Bitwise is leaving the door open for other products.
“We don’t have a filing, but certainly thinking about Ethereum [spot ETFs] and you can imagine we’re thinking of other things you can do with bitcoin and ethereum,” Hougan said. “We’ve entered the ETF era of crypto and we’ve proven investors want to access crypto through ETFs. We’re going to provide those products to the extent possible under regulation.”
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