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Key Takeaways
- BlackRock’s spot bitcoin ETF, or IBIT, held more than $1 billion in bitcoin just five days after it began trading.
- IBIT is the second spot bitcoin ETF to achieve this milestone, with Grayscale Bitcoin Trust still dominating the market.
- Despite Grayscale’s dominance, market data indicates funds are flowing out of their spot bitcoin ETF into alternatives from BlackRock, Fidelity, and others.
- Analysts say retail investor demand for spot bitcoin ETFs is modest, but that may be because not all brokerages offer access to the product.
The iShares Bitcoin Trust (IBIT) from BlackRock (BLK) now holds more than $1 billion worth of bitcoin, reaching the milestone just five days after the exchange-traded fund (ETF) began trading on Jan. 11.
IBIT’s was a quick sprint to $1 billion, but not the fastest. SPDR Gold Trust (GLD) pulled in $1 billion in just three days back in 2004, according to Bloomberg Senior ETF Analyst Eric Balchunas.
What’s Happening With Spot Bitcoin ETFs?
Although spot bitcoin ETFs were first listed on U.S. exchanges just last week, there are already some clear winners and losers emerging in the race for dominance in this niche market.
Despite significant outflows, Grayscale Bitcoin Trust (GBTC) still accounts for nearly 90% of the market, according to data shared by Bloomberg Analyst James Seyffart. That dominance is largely thanks to its previous existence as a trust before its conversion to an ETF.
BlackRock’s IBIT and the Fidelity Wise Origin Bitcoin Fund (FBTC) have been the most prominent alternatives for investors exiting GBTC following their approval last week by the U.S. Securities and Exchange Commission (SEC).
BlackRock head of US iShares product, Rachel Aguirre told Bloomberg TV that the ETF is seeing flows from many different directions, including from retail investors and self-directed investors.
Who Is Buying Spot Bitcoin ETFs?
According to Vanda Research, retail investor appetite for spot bitcoin ETFs remains “modest.” That could also be a function of access to these products. Some brokerages, such as Vanguard, are not offering the spot bitcoin ETFs to their clients while others are offering only a few among those available.
The spot bitcoin ETF market as a whole is expected to grow in the coming years, with some analysts predicting it to grow to $100 billion. In terms of new money coming into the bitcoin (BTCUSD) space, Morgan Creek Capital CEO Mark Yusko has said these new products could open the door for as much as $300 billion to enter the bitcoin market.