The upward trend of Bitcoin has significantly receded this week, with Bitcoin prices falling by about 11% since the US Securities and Exchange Commission approved the listing of Bitcoin ETFs on January 10th.
Trading platform Cube Bartosz Lipinski, CEO of Exchange, stated that the hype surrounding Bitcoin ETFs has weakened and traders' attention may shift elsewhere. Currently, option data indicates that Bitcoin's support price is around $40000.
However, investors have temporarily withdrawn from Bitcoin as a fundamental asset, while its derivative ETF funds continue to thrive. Data shows that investors deposited $371 million into BlackRock's Bitcoin ETF on Wednesday, driving the fund's total size to exceed $1 billion, becoming the first Bitcoin ETF to break through $1 billion.
In addition, Fidelity's Bitcoin fund size has reached $880 million, approaching the $1 billion mark. These two funds together accounted for 68% of the inflow of Bitcoin ETF funds, totaling nearly $2 billion.
The fiery battlefield
Todd Sohn, ETF strategist at Strategas, said that this situation is not surprising if it is a BlackRock ETF. BlackRock has always attached great importance to assets such as cryptocurrencies and has many hidden powers.
According to media surveys, a large portion of the funds flowing into Bitcoin ETFs such as BlackRock and Fidelity also come from Grayscale's Bitcoin ETFs. The fund was previously a trust fund and later converted to an ETF, with managed funds exceeding $28 billion at one point. However, there have been outflows of $1.6 billion so far.
One important reason for investors leaving Grayscale is the high management fees. Grayscale's Bitcoin ETF management rate is currently the highest in the industry, reaching 1.5%. According to media reports, BlackRock and Fidelity have set management rates of only 0.2% and 0% respectively to attract investment.
Due to the simultaneous listing of ten Bitcoin ETFs, a fierce competition has arisen in the industry, and management fees are currently the most important bargaining chip for major funds. Fuda promises to waive investor management fees until July 31st.
Some people resort to cheating tactics. Ark Asset Management Company, managed by Cathie Wood, a well-known Wall Street investor, is snapping up its own Bitcoin ETF and using its sisters fund to purchase Bitcoin ETF (ARKB).
Industry insiders point out that this move is somewhat like cheating, but it is not illegal, and other people in the industry may also use it. Some Bitcoin ETF issuers may include the product in their model investment portfolio or adopt other ways of increasing holdings.
Faced with fierce competition, Grayscale's mentality is as stable as an experienced driver. Zach Pandl, Managing Director of Grayscale Research, pointed out that Grayscale has been leading Bitcoin investments for over a decade, and since other issuers have entered, the flow of funds to other new products is understandable.
He also stated that flowing from one Bitcoin ETF to another will not change the industry's sentiment, and the total net inflow is the basis for measuring value.
The President of ETF Store, Nate Geraci, pointed out that if the attractiveness of Bitcoin ETFs to attract funds does not diminish, issuing institutions will be more bold in launching various products, including leveraged, reverse, and option based Bitcoin ETF strategies.