In another remarkable day for cryptocurrency investments, US-based spot Bitcoin Exchange Traded Funds (ETFs) witnessed a substantial influx of capital, totaling $257.3 million on Thursday. This significant inflow marks the third consecutive day of large-scale investments into these funds, signaling a robust and returning interest among institutional and retail investors alike in Bitcoin.
The Grayscale Bitcoin Trust (GBTC) reported a positive inflow of $4.6 million, continuing its upward trend for the second day. BlackRock, a major player in the investment arena, also saw a noteworthy resurgence in inflows, capturing $93.7 million after a stagnant three days. This development indicates a renewed confidence in Bitcoin from a variety of investor bases.
Other ETF providers also saw impressive inflows: Fidelity reported $67.1 million, Bitwise took in $1.4 million, ARK Invest added $62 million, Invesco received $6.2 million, Franklin saw $3.8 million and Valkyrie gained $18.5 million.
This sustained inflow trend across multiple providers underlines a collective bullish sentiment in the market. Renowned crypto analyst WhalePanda (@WhalePanda) highlighted the significance of these movements.
“Yesterday’s ETF flows by FarsideUK was entirely positive again for $257.3 million. […]. After the price going back to $66.500 on Wednesday, we had some consolidation and it’s now [above $66,000]. No other major news was announced, the fact that the price didn’t move with these inflows tells me that there is another party unloading in this range.”
Good morning,
Yesterday’s ETF flows by @FarsideUK was entirely positive again for $257.3 million.
Blackrock finally had inflows again for $93.7 million. Fidelity did $67.1 million and Ark $62 million.
Even $GBTC was positive for $4.6 million.
After the price going back to… pic.twitter.com/qpJFCAoenS
— WhalePanda (@WhalePanda) May 17, 2024
Old Bitcoin ETF Debate Reignites
Amidst the inflow of excitement, a seasoned debate concerning the transparency and potential for market manipulation within the Bitcoin ETF ecosystem resurfaced yesterday. Tyler Durden, a pseudonymous crypto commentator, expressed concerns about the off-chain recording of Bitcoin transactions by large institutions like BlackRock.
“Blackrock can take as much Bitcoin as they want from Coinbase and the transaction is recorded off chain. I’d like to see all of the ETF’s wallets. […] This means they can borrow Bitcoin from Coinbase to short and are not required to show any proof they hold 1:1. There’s also a 2-30 day settlement. All settlements are done in cash. The writings on the wall, unless someone can find the ETFs wallets on-chain.”
Responding to these concerns, Dave Weisberger, chairman of CoinRoutes, defended the practices imposed by regulatory guidelines: “OF COURSE they had to do it that way because of the ‘cash creation/redemption’ the SEC forced. The Authorized Participants can’t ‘touch’ spot Bitcoin so MUST engage in off-chain transactions. As I said repeatedly, ‘in kind’ would have been more efficient & transparent, but this fear mongering is nonsense.”
Weisberger emphasized that the ETFs are required by their charter to hold full backing in spot Bitcoin for all settled shares, ensuring adherence to regulatory standards.
Moreover, James Seyffart, a Bloomberg ETF expert, also weighed in, supporting Weisberger’s perspective and hinting at the ongoing learning curve in the ETF industry regarding cryptocurrency transactions. “The gang learns about cash creation,” Seyffart said, “What a throwback to early December 2023. I pretty much agree with Dave here.”
At press time, BTC traded at $66,109.
Featured image created with DALL·E, chart from TradingView.com
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