Spot Bitcoin ETFs Soar Amid Halving Anticipation

Discover how spot bitcoin ETFs soar amid crypto halving anticipation

Spot bitcoin ETFs surged in tandem with the underlying asset's price one day before the highly anticipated halving, but inflows into the three-month-old products have been negative for the last four days.

Recently, the two trusts that have brought in the most money since 10 funds started trading on January 11, BlackRock's iShares Bitcoin Trust (IBIT) and the Fidelity Wise Origin Bitcoin Trust (FBTC), saw gains of around 3% and almost 4%, respectively. Even while the fund was losing money, the Grayscale Bitcoin Trust (GBTC), which manages the most significant amount of assets, recently increased by about 4%.

According to BitMEX's research team, GBTC saw net withdrawals of $133 million on Wednesday and has now experienced outflows totaling over $16.6 billion since its conversion from a trust. A combination of Grayscale's losses and more muted investor demand caused the original 10 spot bitcoin funds to have net outflows on four out of the last five days as of the closing of U.S. trading on Wednesday. This is their second-longest run of negative returns.

The fall reverses the funds' brief history of sharp expansion to more than $56 billion in AUM. It occurs in the midst of a prolonged price decline brought on by sociopolitical unrest throughout the world and unexpectedly stable U.S. inflation numbers. Recently, the bitcoin price was trading above $63,500, up 2.3% from the previous day, but it is still well behind its record high of roughly $73,000 set in March. Its over 45% increase is primarily attributable to the approval of the spot Bitcoin ETF.

Consideration of Halving

Observers of the spot bitcoin ETF believe that investors have already factored in the crypto halving, which reduces the amount of money that miners get paid for confirming transactions on the Bitcoin network. They observe that given the prolonged gains that followed the three prior halvings in 2012, 2016, and 2020, price hikes are likely to happen later this year.

Thursday, Eric Balchunas, a senior ETF analyst at Bloomberg, requested "some perspective on the 'it's so over' ETF flows lately" in a post on the social networking site X/Twitter. Noting that the price decline of bitcoin was "absolutely normal for the ETF category to cool off after a breathtaking pace like this," he stated.

"Even with the price drop, BTC is up 144% since BlackRock's filing last June and 47% YTD, which is 10x the return of $QQQ = if you are depressed with those returns, you should prob seek medical help," he stated.