Bitcoin-linked ETFs see surge in investments as cryptocurrency rebounds

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28th March 2024 – (Hong Kong) The recent rally in bitcoin’s market price has catalyzed a significant uptick in investments into a suite of newly launched exchange-traded funds (ETFs) tied to the digital currency. Industry observers are noting an enthusiastic return of capital inflows, suggesting a resurgence of investor confidence.

Todd Rosenbluth, the head of research at VettaFi, an analytics firm, highlighted the correlation between the cryptocurrency’s recovery and the spike in interest towards these investment vehicles. The nine ETFs, which premiered this January, have experienced a remarkable influx of nearly $1 billion in the early days of this week, as reported by BitMEX Research. Detailed statistics for Wednesday’s flows are expected to be disclosed on Thursday morning.

A notable shift in investor preference has seen the Fidelity Wise Origin Bitcoin Fund outperforming BlackRock’s iShares Bitcoin Trust. Early in the week, the Fidelity fund attracted a robust $540.9 million, overshadowing the $197.7 million garnered by BlackRock’s offering within the same timeframe.

In contrast, the Grayscale Bitcoin Trust, which transitioned into an ETF concurrently with the launch of the other nine, has persistently experienced outflows, independent of Bitcoin’s price fluctuations. The beginning of this week saw a continuation of this trend with the trust shedding $562.4 million.

David Mercer, the CEO of LMAX Group, an institutional cryptocurrency exchange, pointed out the disproportionate influence of Grayscale on the overall picture. While the ETFs’ capital movements are significant within their market segment, Mercer contends they are minor when juxtaposed with Bitcoin’s total market capitalization.

Importantly, Mercer emphasised the apparent impact of ETF investments on the price trajectory of bitcoin. He remarked on the observable pattern: the cryptocurrency’s value struggles to ascend amidst ETF outflows, underscoring the intertwined nature of ETF activity and Bitcoin’s market performance.