Bitcoin ETF performance 5 months after launch and comparison with gold ETF

Author: filippopozzi, web3 researcher Source: medium Translation: Shan Ouba, Golden Finance

The Bitcoin spot ETF was approved in early January 2024, providing important new investment opportunities for individuals and institutional firms that need regulated tools to enter the cryptocurrency market. After overcoming the excitement of the first few months, we now have the opportunity to analyze the impact of these ETFs on the market with more calm and complete information. As is our habit in this channel, let's do this by examining the most relevant data.

Market Price

Let's start with the most common analysis, that is, price analysis. The approval of the Bitcoin ETF on January 11, 2024, sparked a huge interest in the space, which translated into a sharp rise in prices, from about $45,000 on the day of approval to a new all-time high of about $73,000, before stabilizing at around $65,000.

Trading Volume

Another important metric for evaluating the success of an ETF, especially for issuers, is of course trading volume, because for issuers, the rule of "volume = commission" applies. From this data sheet, we can see that overall trading volume achieved excellent results in the first few days after launch, but slowed down slightly before exploding in March, with the total daily trading volume of all ETFs peaking at nearly $10 billion. By analyzing the colors of the different candles, we notice that BlackRock's ETF IBIT (in dark blue) is the most traded ETF. It is followed by Grayscale ETF GBTC, although in this case, the trading volume is mostly negative because it used to be a trust fund and recently converted to a spot ETF with very low commissions compared to its competitors. In third place is Fidelity's ETF FBTC.

Value of assets under management

Now let's focus on analyzing the size of funds on the market. Before that, let's explain a little about the ETF GBTC, which is represented in red in the figure below. It can be clearly seen that GBTC is the only ETF that manages a large amount of Bitcoin on the day of its launch. But how is this possible if all ETFs are launched on the same day?

GBTC, or Grayscale Bitcoin Trust, was a trust before it became a spot ETF because it did not obtain approval from the U.S. Securities and Exchange Commission (SEC) for spot Bitcoin ETFs. The trust is one of the first financial instruments designed to provide Bitcoin investment opportunities. Compared with spot ETFs, it is characterized by being a closed-end fund with less stringent supervision, so it can be launched on the market before the SEC approves spot ETFs.

Since GBTC has now been converted to a spot ETF like all other ETFs, but with much higher usage fees than its competitors, the GBTC fund is slowly losing more and more BTC to other ETFs.

After highlighting the situation of GBTC, it can be seen from this chart that the two fastest growing ETFs are IBIT and FBTC, the BlackRock and Fidelity ETFs, which confirms the previous analysis of trading volume. It is followed closely by ARKB (ARK Invest ETF) and BITB (Bitwise ETF), albeit with much smaller market caps.

A final consideration about this chart is that the value of assets under management by funds has ceased to grow after peaking between March and April, stabilizing at around $60 billion, leading to a slowdown in the price of Bitcoin, as highlighted in previous analysis.

Comparison of Shares Bitcoin Trust and iShares Gold Trust

To get a fuller picture of the size of these new ETFs, and to avoid numbers becoming meaningless, I suggest comparing BlackRock’s Bitcoin ETF (IBIT) to BlackRock’s Gold ETF (IAU).

It is important to emphasize that this comparison cannot be considered free of asymmetry, given the different nature of the two themes examined, and the different roles that gold and Bitcoin may play in institutional portfolios.

We will therefore limit ourselves to seeking general information, placing this new Bitcoin ETF in the “traditional” market landscape, in order to gain a broader understanding of how the institutional world views Bitcoin.

For the purpose of this analysis, I have provided only the data reported by BlackRock on the corresponding ETF pages, and I have left here links to the pages of the iShares Bitcoin Trust and the iShares Gold Trust.

Key Factors iShares Bitcoin Trust

Key Factors iShares Gold Trust

Let’s take a closer look at these numbers. As you can see, I have highlighted the data that I believe is most relevant for our research purposes, namely the value of the fund’s assets under management, the average number of shares traded during a trading day, and the closing price of the ETF (we need to calculate the volume in USD)

• The value of the fund’s assets under management → As highlighted by the provided image, the Bitcoin ETF is valued at around $19 billion, while the Gold ETF is valued at around $28 billion, showing a surprising closeness between the two ETFs.

• Trading Volume → Considering that the number reported under “30-day average volume” represents the average number of shares traded within the ETF, we can multiply that number by the share price to arrive at the volume in USD. In our case, we use the closing price as a reference. Therefore, the average daily trading volume of Bitcoin ETF last month was about $800 million, while the average daily trading volume of Gold ETF was about $260 million, which shows that BlackRock clients were more interested in Bitcoin ETF than Gold ETF last month. The following focuses on the daily trading volume history of BlackRock Bitcoin ETF.