BlackRock’s Bitcoin bet pays Off – $2 billion and counting

Bitcoin Exchange-Traded Funds (ETFs) have experienced a significant surge in inflows, reaching a notable milestone of $2 billion. This surge is indicative of growing investor interest and confidence in the crypto market, particularly in Bitcoin. 

Notably, BlackRock, the world’s largest asset manager, has played a pivotal role in leading this influx of investment into BTC ETFs. BlackRock’s involvement underscores the increasing mainstream acceptance and adoption of cryptocurrencies within the traditional financial sector.

BlackRock bulls stampede into bitcoin ETFs

The emergence of BTC ETFs provides investors with a regulated and accessible avenue to gain exposure to BTC’s price movements without the need to hold or trade the digital asset itself directly. This development marks a significant step forward in the integration of cryptocurrencies into traditional investment portfolios, attracting both institutional and retail investors alike.

The ETFs hold $13.48 billion worth of coins at $52,100 each, which is $2.08 billion more than the total value invested in those funds to date. In the preceding five weeks, the collection of new bitcoin-backed funds has received a total of $11.4 billion in capital inflows (excluding Grayscale Bitcoin Trust).

The cash was then purchased by their respective issuers, a group of ten led by BlackRock, Fidelity, Ark, 21Shares, and Bitwise, to purchase bitcoin on behalf of ETF shareholders.

This is primarily because IBIT has the largest assets under management (AUM) at 115,991 BTC ($6.04 billion) based on $5.17 billion in inflows, representing a current price appreciation of over $870 million, or 17%.

On the contrary, BTCO shareholders of Invesco-Galaxy are significantly ahead, albeit on a lesser scale.

BTCO has generated net transactions amounting to $241.4 million and presently possesses 5,970 BTC with a value of $311 million—a disparity of 29% or nearly $70 million.

Valkyrie, Fidelity, and VanEck funds have also outperformed BlackRock by approximately 20%. The divergences in unrealized gains among the various funds serve as evidence of unique purchasing patterns exhibited by distinct investor cohorts.

For instance, graphing BlackRock inflows against the price of BTC reveals that investors have maintained consistent IBIT allocations over a period of time.

As a consequence, IBIT has achieved a consistent dollar-cost average into BTC, which has resulted in diminished unrealized profits in comparison to BTCO, the fund managed by Invesco-Galaxy.

In contrast, BTCO received two-thirds of its year-to-date inflows in just four days (16–19 January), as bitcoin floundered between $41,600 and $43,100 after falling more than 15% in the days following the debuts of ETFs.

Bitcoin ETFs market performance

BTC deviated from $40,000 for the first time in over a month, prompting an additional influx of funds two days later. Since then, Bitcoin has increased by approximately 33%, propelling BTCO and its shareholders as far into the positive as is practically feasible.

A portion of those investors appear to have gone even further by withdrawing their profits, making BTCO the only bitcoin ETF since launch to register outflows, excluding GBTC. 

Investors withdrew over 1,500 BTC ($78.1 million) from Invesco-Galaxy’s fund between February 9 and 14, which was equivalent to approximately 20% of the fund’s treasury at the time. During this time, the price of bitcoin increased from below $45,500 to $50,000.

While BTCW from WisdomTree trails the field marginally, most of its inflows were generated on its inaugural day of trading, well before the bitcoin decline.

This month, Grayscale’s premier fund, which is now an ETF in its own right, has lost nearly 2,400 BTC ($124.9 million) on average per trading day. The total value of the bitcoin withdrawn from GBTC since January 11 was $6.86 billion at the moment of the withdrawals.

The identical quantity of bitcoin (162,259 BTC) presently trades for $8.44 billion, representing unrealized potential gains of 23% if that capital had not re-entered the market immediately.

As of this writing, the current value of Bitcoin (BTC) is $51,964.70, reflecting a 0.1% increase since yesterday and a 0.0% increase from an hour ago. The present value of Bitcoin is 9.7% greater than its value from seven days ago. The total volume of Bitcoin traded over the last 24 hours was $25,460,236,920.

The live price of Bitcoin ETF, as reported by Binance, is $0.000633 per ETF (ETF/USD), with a current market capitalization of $0.00 USD. The volume of 24-hour trading is $35,629.73 USD. Bitcoin ETF has lost -31.30% over the past twenty-four hours and has zero circulating supply.