March 5, 2024

First Bitcoin ETF trades $1.5B as GBTC ‘discount’ echoes $69K BTC price

ProShares and Grayscale lead a surge of activity in Bitcoin investment products, with analysis confident of implied demand for a Bitcoin spot ETF.

Bitcoin (BTC) institutional investment vehicles are seeing a major volume boost as excitement over possible United States regulatory changes takes hold.

Data from resources including Bloomberg showed Bitcoin exchange-traded funds (ETFs) and others nearing record weekly inflows.

BITO, GBTC trade $2.5 billion 

Hints that the U.S. might soon allow a Bitcoin spot price-based ETF have not only impacted BTC price action — the surrounding ecosystem has benefitted in kind.

In addition to exchanges and mining firms, embattled institutional investment options are also seeing a resurgence in demand.

As noted by Bloomberg senior ETF analyst Eric Balchunas, at least two household names saw “notable” volume in the trading week through Oct. 27.

Among them was the ProShares Bitcoin Strategy ETF (BITO), the first futures-based ETF to get the green light in the U.S. in 2021.

“$BITO traded $1.7b last week, 2nd biggest week since its wild WEEK ONE,” Balchunas wrote in part of X commentary.

He noted that the stalwart Grayscale Bitcoin Trust (GBTC) fetched $800 million in volume, helping reduce its discount to the Bitcoin spot price to two-year lows.

“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,” the X post concluded.

Others also picked up on the data, with William Clemente, co-founder of crypto research firm Reflexivity, describing ETF trading as “back in full steam.”

Legacy finance could “know something we don’t yet”

As Cointelegraph reported, GBTC has seen a remarkable comeback in recent months, even prior to BTC/USD gaining 15% last week.

Related: US court issues mandate for Grayscale ruling, paving way for SEC to review spot Bitcoin ETF

Legal victories on the long road to gaining permission to convert GBTC into a spot ETF provided kindling, and Grayscale’s product now trades with an implied share price, which is just 13.1% below the BTC spot price.

Per data from monitoring resource CoinGlass, this is the lowest since November 2021, when Bitcoin itself was at all-time highs.

“The GBTC discount keeps narrowing,” popular Bitcoin and altcoin trader Mister Crypto meanwhile responded.

“Maybe TradFi knows something we don’t know yet…”

GBTC premium vs. asset holdings vs. BTC/USD chart (screenshot). Source: CoinGlass

Despite this, investment management firm ARK Invest has reduced its GBTC holdings in step with the share price gains.

While ARK itself plans a Bitcoin spot ETF launch, GBTC now accounts for 10.24% of its ARK Next Generation Internet ETF (ARKW) — its first change since November 2022.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.