Bitcoin ETFs witness historic trading volume amid price surge

In a landmark event for the cryptocurrency market, U.S.-based spot Bitcoin exchange-traded funds (ETFs) experienced an unprecedented trading volume, surpassing $10 billion. This significant milestone coincided with Bitcoin reaching a new all-time high of $66,004.

Record trading volume for Bitcoin ETFs

BlackRock’s iShares Bitcoin ETF (IBIT) emerged as the leader in trading volume, totaling $3.7 billion, closely followed by the Grayscale Bitcoin Trust (GBTC) with $2.8 billion and the Fidelity Wise Origin Bitcoin Fund (FBTC) with $2 billion. These ETFs, less than two months old, have demonstrated remarkable performance.

However, the surge in trading volume was accompanied by considerable price volatility. Bitcoin experienced significant price swings during U.S. trading hours, reaching a peak of $69,200 around 3:00 pm UTC, only plummeting by 12% to a low of $60,860 five hours later. As of the latest update, Bitcoin has partially recovered, currently trading at $63,350.

Profit-taking amidst market uncertainty

The day’s volatility underscored the unpredictable nature of Bitcoin trading. IBIT and FBTC witnessed an 8.6% decline in value, reflecting similar price drops across other spot Bitcoin ETFs. Recent market activity suggests a shift towards profit-taking as traders capitalize on Bitcoin’s 50% price surge over the past month.

Last week, substantial net inflows drove significant trading activity in Bitcoin ETFs, attracting over $1.7 billion in fresh investments. However, the recent market downturn indicates a cautious approach among investors, leading to a surge in profit-taking activities.

Derivatives market optimism and risks

Optimistic sentiment in the derivatives market has also contributed to Bitcoin’s upward trajectory, with investors leveraging their positions up to 100 times using products like perpetual futures. However, this optimism comes with risks, as evidenced by over $800 million of bullish positions facing liquidation in the perpetual futures market.