Spot Bitcoin ETF Expectations Boost BITO and GBTC Trading Volume
Bitcoin Investment Products Surpass $2.5 Billion in Weekly Trading Volume As Investors Wait For Spot ETF
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Spot Bitcoin ETFs might not be here yet, but investors are already showing their appetite as Bitcoin investment products saw over $2 billion in trading volume last week.
This volume is coming on the back of optimism that SEC approval of spot Bitcoin ETFs is a foregone conclusion. The positive sentiment has already caused BTC to reach its highest price this year while also lifting the value of several altcoins.
According to data from multiple sources, two Bitcoin investment products – Grayscale Bitcoin Trust and ProShares Bitcoin ETF (BITO) – saw $2.5 billion in trade over the week ending 27 October.
Bloomberg ETF expert Eric Balchunas noted that BITO alone recorded $1.7 billion in trading volume. That is its largest weekly volume since its first week of launch. BITO is the first Bitcoin futures ETF to be approved by the SEC. Since its approval, other futures ETFs have been listed. Meanwhile, GBTC also recorded $800 million in value traded.
Notable: $BITO traded $1.7b last week, 2nd biggest week since its wild WEEK ONE. $GBTC did $800m. That's $2.5b (top 1% among ETFs) into two less desirable methods (vs spot) for exposure = while we think spot ETFs unlikely to set records on DAY ONE, clearly there's an audience pic.twitter.com/6bFYtE0UoR — Eric Balchunas (@EricBalchunas) October 28, 2023
Investors Hungry for Spot Bitcoin ETF
With just two Bitcoin products having a combined volume of $2.5 billion in a week, investors believe this is the sign of what to expect when spot ETFs are finally approved. Balchunas pointed out that there is "clearly there's an audience."
The volume is especially noteworthy given that both investment products don't provide direct exposure to BTC like a spot Bitcoin ETF would do. Inflows into GBTC are likely due to optimism about its potential conversion into a spot ETF. But that has not stopped one of its biggest backers, Ark Invest, from selling 100,739 GBTC shares worth $2.5 million.
What to Expect on Day 1 of Spot ETF?
Given expectations around spot Bitcoin ETF, many believe that BlackRock IBTC could reach record-high trading volume on the first day. But Balchunas believes it's unlikely that any spot Bitcoin ETF would set such records. He attributes this view to the market maturity presently compared to 2021, when BITO launched.
Additionally, IBTC would likely not be the only spot ETF to be listed on the same day. So it won't have the market to itself, unlike BITO. BITO recorded $550 million in inflows on its first day as trading volume reached almost a billion. This makes it the second most traded debutant ETF.
Whales Activity Surge
Now that Bitcoin prices are back up, whales have also become active. IntoTheBlock data shows that the number of Bitcoin transactions worth over $100k processed reached 23,400 last week. That is the highest level since May 2022 and suggests that institutional interest is heating up. Transaction activity has also increased, with fees up by 44.8%.
Meanwhile, Bitcoin might still be positioned for further gains. Available data shows that the market value to realized value (MVRV) ratio is currently 150%. This is half the level in previous bull markets, which peaked at 300%+ MVRV. Thus, the current market is not yet overheated territory, and there is still room for more growth.
