Bitcoin Institutional Investment Vehicles See Surge in Volume Amid Regulatory Excitement
Bitcoin (BTC) institutional investment vehicles are experiencing a significant boost in volume as anticipation over potential regulatory changes in the United States grows. Data from sources such as Bloomberg indicates that Bitcoin exchange-traded funds (ETFs) and other investment options are approaching record weekly inflows.
The mere suggestion that the U.S. may soon approve a Bitcoin spot price-based ETF has not only impacted BTC price action but has also benefitted the surrounding ecosystem. Alongside exchanges and mining firms, institutional investment options that have faced challenges are now witnessing a resurgence in demand.
Bloomberg’s senior ETF analyst, Eric Balchunas, pointed out that at least two prominent investment firms recorded notable trading volume during the week of October 27. Among them was the ProShares Bitcoin Strategy ETF (BITO), which became the first futures-based ETF to receive approval in 2021.
BITO registered a trading volume of $1.7 billion last week, making it the second-largest week since its eventful debut. Additionally, the Grayscale Bitcoin Trust (GBTC) saw a volume of $800 million, bringing its discount to the Bitcoin spot price to the lowest level in two years.
While it is unlikely that spot ETFs will set records on their first day, the substantial volume poured into the less desirable futures-based methods of exposure indicates a clear demand from investors, as suggested by Balchunas.
The data has drawn the attention of others in the industry, with William Clemente, co-founder of crypto research firm Reflexivity, describing ETF trading as “back in full steam.”
Even prior to last week’s 15% gain in BTC/USD, GBTC had witnessed a remarkable comeback. Legal victories in the journey toward converting GBTC into a spot ETF played their part, and Grayscale’s product now trades with an implied share price just 13.1% below the BTC spot price. This is the narrowest discount since November 2021, when Bitcoin reached its all-time highs.
Notably, Mister Crypto, a popular Bitcoin and altcoin trader, responded to the narrowing GBTC discount by suggesting, “Maybe TradFi knows something we don’t know yet…”
Despite the growing confidence in GBTC, investment management firm ARK Invest has reduced its holdings in line with the share price gains. While ARK has plans to launch a Bitcoin spot ETF, GBTC currently accounts for 10.24% of its ARK Next Generation Internet ETF (ARKW), marking its first change since November 2022.
It is important to note that this article does not provide investment advice or recommendations. Readers are advised to conduct their own research before making any investment decisions.