Bitcoin celebrated his 15th birthday this month with a spirited introduction to Wall Street. Now this nascent entity may have to grow rapidly.
Investors began trading 11 exchange-traded funds (ETFs) in the United States on January 11 after receiving regulatory approval to track bitcoin’s spot price. After two trading days, they held a total of 644,860 bitcoins, which appear to be worth more than $27 billion, according to data from analytics firm Glassnode.
Most of these, more than 500,000 bitcoins, were previously held in a closed-end fund, Grayscale Bitcoin Trust, which was allowed to be relaunched as one of the new ETFs.
The 11 ETFs have seen a combined $4.1 billion in inflows since Jan. 11, according to CoinShares data.
Glassnode for the world’s largest cryptocurrency to enter the world’s largest stock market; “It marks the end of the beginning of Bitcoin’s maturation and growth phase,” he said.
This illustrated the views of many investors who say that increased liquidity will moderate bitcoin’s volatility over time.
Brent Donnelly, foreign exchange trader and president of Spectra Markets; “This is an almost inevitable evolution as a new security born with a largely uncertain value and price matures into a mainstream asset in which a million investors have invested,” he said.
The total value of Bitcoin traded on cryptocurrency exchanges averages about $500 million per day, according to Donnelly. By comparison, US spot bitcoin ETFs recorded $4.6 billion in volume in their first trading day.
However, it is too early to gauge whether new bitcoin investment products will maintain investor interest in the long term, market participants warned.
Still, after two trading days, the 644,860 bitcoins held by 11 U.S. ETFs represented nearly 30% of all global spot bitcoin ETF holdings, according to Glassnode data.
Even if trading volumes drop as excitement fades, increased market liquidity could see the launch of derivatives that bet on bitcoin’s volatility, some market watchers say.
Anders Helseth, head of research at K33 Research; “Due to the current importance of US ETF flows, we expect the US trading session to be the most important session in terms of bitcoin’s price action.” said.