Record volume for Bitcoin ETFs
In March, trading volume for physically backed Bitcoin ETFs hit a record $111 billion, nearly three times higher than the $42 billion traded in February. Approved by the SEC earlier this year, these ETFs are rapidly growing in popularity among institutional and retail investors. The significant increase in trading volume is seen as a sign that the ETFs are responding to strong market demand.
Market leaders and competitors
At the top was BlackRock's Bitcoin ETF (IBIT), which accounted for half of the total trading volume. Grayscale's GBTC and Fidelity's FBTC were also significant competitors, accounting for 20% and 17% of volume, respectively. Eric Balchunas, an ETF analyst at Bloomberg, compared IBIT's dominance to that of the benchmark SPDR Gold ETF.
Connection to Bitcoin price rise
The rise in ETF trading coincided with the rise in Bitcoin prices to record levels, suggesting that these ETFs are changing market dynamics and generating new demand. Despite initial skepticism, capital inflows into these products have been extremely positive, particularly for leading funds such as IBIT and FBTC.
ETFs and the Bitcoin mining offer
In March, ETFs purchased about 66,000 BTC, which is significantly higher than the 28,500 BTC produced through mining. This significant gap between supply and demand is likely to continue to widen, especially with the upcoming Bitcoin halving, which will reduce the rate of new coin production by half.
The role of ETFs in the crypto market
Physically backed Bitcoin ETFs have proven their importance in the market with strong capital inflows and active trading, indicating that their rise is likely to continue.
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