The price of bitcoin hit $50,000 today, a month after the US Securities and Exchange Commission approved 11 applications for spot bitcoin ETFs.
Issuers of these ETFs have seen demand soar beyond initial projections of a few billion. Assets under management at these issuers total about $28.35 billion, with a market capitalization of $39.8 billion, according to Blockworks data. Trading volume in 24 hours was $1.38 billion.
Leading the pack of spot bitcoin ETFs is Grayscale Bitcoin Trust with $20.27 billion, followed by BlackRock’s iShares Bitcoin Trust with $3.31 billion and Fidelity’s Wise Origin Bitcoin Trust with $2.75 billion.
Image Credits: Blockworks Bitcoin Spot ETF tracker (opens in new window)
“Consistent inflows and volumes are higher than I expected,” said Matt Hougan, chief investment officer at Bitwise Asset Management. “The fact that there were not just first-day flows, but strong positive inflows on 18 out of the first 19 days is really pleasing. It makes me extremely optimistic about where the price of bitcoin is going and its importance in the world.”
Bitwise runs the Bitwise Bitcoin ETP, currently the fourth largest spot bitcoin ETF by market capitalization. But the road to this point was not easy. In fact, Bitwise held over 20,000 meetings last year with financial advisors in preparation for the expected approval, Hougan said.
“It was scary to launch, while we’re not BlackRock, we’re not new to this space. [But] we provide crypto asset funds, so we had to be relevant,” said Hougan. Now, he believes ETFs have reached escape velocity and are “big enough to be financially viable.”
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 his fund becomes extremely large, he said he didn’t know if that rate would hold.
“Right now, we like where we are.”
Hougan also believes demand will continue to grow as more national account platforms come online and inbound interest from large institutions increases. “It’s not like they’re buying $100 million worth of bitcoins today, but there are significant inflows and encounters with platforms that have billions of dollars in assets.”
A month after the approvals were granted, Hougan believes spot bitcoin ETFs will hold the title for the “biggest ETF launch of all time.”
“Even after 15 years in the ETF business, it’s unlike anything I’ve ever seen… it’s not just a little bigger. it’s much bigger.”
Over the next 11 months, Hougan is optimistic that volumes will continue to increase due to the timing and demand of bitcoin prices. The natural audience for this product needs time to learn and make decisions, and national accounts need time to refine them, he added.
“I think it will be up, plateau, re-accelerate,” Hougan said. “I don’t think demand will slow 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 deposit, but we are definitely thinking about Ethereum [spot ETFs] and you can imagine we’re thinking about other things you can do with bitcoin and ethereum,” Hougan said. “We have entered the crypto ETF era and have proven that investors want access to crypto through ETFs. We will provide these products to the extent possible under regulations.”
