To the moon? Spot Bitcoin ETF inflows push BTC to $1T market cap

Posted: February 15, 2024

• Bitcoin’s market cap skyrocketed after more than two years
• GBTC exec expressed confidence in accurate price tracking

The king coin is back! On 14 February, Bitcoin (BTC) regained its  $1 trillion market capitalization, a level not seen since late 2021. This surge in market value was predominantly driven by considerable inflows into U.S. spot Bitcoin exchange-traded funds (ETFs).

Thomas Fahrer, Co-founder of the BTC tracking platform Apollo, took to X (formerly Twitter) to highlight the extraordinary influx of investments.

We’re witnessing total acceleration of #BTC ETF inflows.

First 20 days of Trading ~ 42K BTC Inflows

Last 4 Days of trading ~ 43k BTC Inflows 🤯

🚀🚀🚀 pic.twitter.com/IqvX7wI13b

— Thomas | heyapollo.com (@thomas_fahrer) February 15, 2024

Over the last four days alone, ten spot Bitcoin ETFs have drawn approximately $2.2 billion at current prices – A pace of accumulation that outstrips the initial four weeks following their launch. 

Ergo, the question – How accurate are these ETFs in tracking Bitcoin? David LaValle, Global head of ETFs at Grayscale Investments, has the answer. In an interview with CNBC TV, he clarified,

“The tracking has been really remarkable. We’ve seen the Bitcoin ETFs really doing a great job of holding very tight… and we’ve seen a liquidity profile that has been indicative of what we anticipated.”

GBTC is not worried about Bitcoin outflows

Since the approval of spot Bitcoin ETFs, Grayscale’s Bitcoin Trust (GBTC) has noted significant outflows. Despite these challenges, Grayscale has maintained its leading position in the market.

At press time, GBTC held a staggering 461,983 BTC. On the contrary, BlackRock had 105,280 BTC and Fidelity had 79,752 BTC, as reported by Apollo. Notably, recent data from CryptoQuant revealed a shift, showing a decrease in GBTC’s outflows, with its price premium now turning positive. 

LaValle expressed satisfaction with the current state of GBTC. He commented, 

“When you’re a leader in the market, and you have the largest fund, and you’re the product that is looked to for the greatest liquidity and for both investment opportunity and also an access vehicle, you’re going to see inflows and outflows.” 

The exec also acknowledged FTX’s need to liquidate some of its GBTC holdings. However, he pointed out that it didn’t transition into another product.

High fee led to investor exodus?

GBTC has been criticized for its relatively high fee of 1.5%, potentially deterring investors. However, LaValle defended the fee by emphasizing GBTC’s decade-long history and strong liquidity. He argued that these factors are more crucial to investors than fees alone and justify GBTC’s cost.

This discussion arises at a pivotal moment though, especially as Fidelity has made a significant move by reducing fees on its European Bitcoin ETF. Eric Balchunas, Senior ETF Analyst at Bloomberg, highlighted this on X. He drew attention to the company’s long-term strategic play in the market.

Fidelity cut the fee on its spot bitcoin ETF in Europe from 75bps to 35bps (a serious fee cut by any standards, shows Fidelity playing long game, morphing into Terrordome warrior) as the US fee war spreads around world h/t @psarofagis https://t.co/SHAsefyNwj

— Eric Balchunas (@EricBalchunas) February 14, 2024