June 21, 2024

Crypto Funds Gain $1.18 Billion Following Bitcoin ETFs Launch

Fueled by the historic launch of 10 spot Bitcoin ETFs, total inflows into crypto investment products blew past the $1 billion mark last week—an impressive showing and a sum more than five times greater than the week prior.

Total global inflows into exchange-traded products (ETPs) reached $1.18 billion last week, according to a new report from CoinShares. The entirety of those gains came from the United States, which added a net $1.24 billion to the crypto economy. Minor outflows from Europe offset those gains. 

Those figures, while impressive, are not record-shattering. In October 2021, thanks to the launch of Bitcoin futures ETFs, the crypto sector saw a record $1.5 billion in inflows in a single week. 

Bitcoin futures ETFs track the price of derivatives contracts, which themselves grant the buyer the ability to buy or sell Bitcoin at a later date. No Bitcoin is actually bought and sold when futures ETFs are bought and sold. Spot ETFs, like the ones that debuted last week, are different; their issuers do actually buy and store Bitcoin on behalf of their clients.

Last week did set a different record, though: net trading volume for crypto industry ETFs last week exceeded $17.5 billion, the largest amount ever recorded in a seven-day period. 

That massive uptick is squarely thanks to the Bitcoin ETFs, which saw $4.5 billion worth of trading on their first day alone. The discrepancy between that larger figure and net inflows is due in part to the transfer of assets already within crypto to new Bitcoin ETFs, and also to the substantial amount of funds converted when Grayscale transitioned its Bitcoin Trust to an ETF on Thursday. 

The Grayscale Bitcoin ETF also saw substantial outflows last week, likely due to the product’s relatively higher fee. 

While last week’s Bitcoin ETF figures were certainly promising, analysts have cautioned that less narrative emphasis should be placed on the financial products’ opening performances—as ETFs are often considered and approached in the long-term by Wall Street investors.

Edited by Andrew Hayward

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