The cryptocurrency market witnessed a notable surge last week, with Bitcoin (BTC) reaching approximately $68,150, marking a 12.1% increase from the previous week’s closing price of around $60,000. The week began with sustained growth on Monday, pushing BTC to nearly $65,000 before it stabilized and then soared over the weekend, culminating in a closing price above $68,000.
This rally was bolstered by strong inflows into Bitcoin Spot ETFs, which saw around $1.2 billion in net inflows over five trading days. This follows a similarly strong performance the previous week, with over $1 billion in net inflows. Notably, Bitcoin Spot ETFs have now enjoyed net inflows for ten consecutive trading days, averaging over $200 million per day. Tuesday alone saw inflows exceeding $400 million, while Friday recorded approximately $385 million.
The cumulative net inflow for Bitcoin Spot ETFs has now reached an unprecedented $17 billion since their inception, setting a new all-time high. Trading volumes have also been impressive, with cumulative volume surpassing $335 billion, including $11 billion in the last week alone, averaging around $2.2 billion daily. This high trading volume is particularly notable given that July and August typically see reduced activity in traditional finance markets. The past week marked the highest weekly average daily volume since April, underscoring the strong interest in BTC.
Turning to Ethereum (ETH), excitement is building as ETH Spot ETFs are set to start trading tomorrow (July 23rd), as confirmed by the Chicago Board Options Exchange (CBOE) on Friday. The CBOE will list several ETH Spot ETFs, including offerings from VanEck, Franklin Templeton, Fidelity, 21Shares, and Invesco.
Issuers of ETH Spot ETFs are engaging in a competitive battle to offer the lowest management fees to attract early inflows. These fees range from 0.15% for the Grayscale Ethereum Mini Trust to 0.25% for Fidelity, Blackrock, and Invesco. This fee competition is crucial as early inflows can secure high assets under management for 1-3 years, given the long-term investment horizons of many ETF investors.
However, it’s worth noting that the Grayscale Ethereum Trust (ETHE), which has been trading for years without redemption options for investors, may experience net outflows similar to those seen with the Grayscale Bitcoin Trust (GBTC) when BTC Spot ETFs launched. ETHE will remain a separate product from the new Grayscale ETH Spot ETFs (Ethereum Mini Trust), and initial strong outflows from ETHE may offset net inflows to the new products, mirroring the pattern observed with BTC in January.
Market participants are anticipating strong interest in ETH Spot ETFs and significant inflows in the first 3-6 months post-launch. Comparing net inflows to those of BTC will be crucial, considering the different market capitalisations, to gauge the appetite of traditional finance investors for digital assets beyond Bitcoin.
Overall, the cryptocurrency market is currently experiencing a dynamic phase with Bitcoin’s strong performance and the impending launch of ETH Spot ETFs. The ongoing developments in the ETF space are likely to play a significant role in shaping the market’s trajectory in the coming months, highlighting the growing integration of digital assets into traditional finance.
This article is based on inputs from Matteo Greco, Research Analyst at the publicly listed digital asset and fintech investment business Fineqia International (CSE:FNQ).