In the world of cryptocurrency, the excitement surrounding potential regulatory changes in the United States is fueling a surge in Bitcoin investment products, with ProShares and Grayscale taking the lead. Data from various sources, including Bloomberg, indicates that Bitcoin exchange-traded funds (ETFs) are experiencing near-record weekly inflows.
During this recent surge, ProShares’ Bitcoin Strategy ETF (BITO) saw impressive trading volume, with $1.7 billion traded in just one week. This marks one of its most substantial trading weeks since its launch in 2021 as the first futures-based ETF in the United States.
Grayscale Bitcoin Trust (GBTC) also played a significant role in this cryptocurrency investment frenzy, accumulating $800 million in trading volume. This surge in trading helped reduce the discount of GBTC’s share price to the actual Bitcoin spot price, reaching its lowest level in two years.
What’s particularly intriguing is the growing speculation that the United States may soon allow a Bitcoin spot price-based ETF. This speculation not only influenced Bitcoin price movements but also triggered a resurgence in demand for various institutional investment options.
As reported by Bloomberg’s senior ETF analyst Eric Balchunas, “While we think spot ETFs are unlikely to set records on DAY ONE, clearly there’s an audience.”
This renewed interest in Bitcoin investment products extends beyond ETFs. Even before Bitcoin’s 15% price increase, GBTC had been staging a remarkable comeback. Legal victories along the path to converting GBTC into a spot ETF were instrumental in this revival. Grayscale’s product now trades with an implied share price, which is just 13.1% below the Bitcoin spot price, a level not seen since November 2021, when Bitcoin was reaching all-time highs.
This development has not gone unnoticed by the cryptocurrency community. William Clemente, co-founder of the crypto research firm Reflexivity, commented, “ETF trading is back in full steam.”
However, there’s a sense that traditional finance might have insights that the wider market is not yet privy to. As the GBTC discount narrows, cryptocurrency traders are speculating about the potential knowledge within traditional finance. One trader, known as Mister Crypto, remarked, “Maybe TradFi knows something we don’t know yet.”
Despite the growing optimism for a Bitcoin spot ETF, investment management firm ARK Invest has reduced its GBTC holdings, aligning with the gains in the share price. Interestingly, while ARK plans to launch a Bitcoin spot ETF of its own, GBTC now accounts for 10.24% of its ARK Next Generation Internet ETF, marking its first adjustment in holdings since November 2022. The evolving landscape of Bitcoin investment products and ETFs continues to captivate both the cryptocurrency and traditional finance communities.