ETF Wrap: Debut of Spot Bitcoin ETFs, First-of-a-Kind ETF Comparisons, and Market Performances
This week in the ETF Wrap, MarketWatch reporter Isabel Wang explores the launch of the first-ever spot bitcoin ETFs in the U.S. and examines the momentum surrounding their debut. The article looks back at first-of-a-kind ETFs that had explosively popular debuts to assess whether the excitement can be sustained.
Spot Bitcoin ETF Launch:
- On Thursday, 11 exchange-traded funds tracking current bitcoin prices began trading in the U.S., marking a significant moment for Wall Street. These ETFs received approval from the Securities and Exchange Commission after extensive discussions with major asset managers like BlackRock, Ark Invest, Invesco, and Fidelity.
- Over $4.6 billion worth of shares traded among the 11 spot bitcoin ETFs on the first day, with notable activity in the Grayscale Bitcoin Trust and iShares Bitcoin Trust IBIT.
Comparisons with Gold ETFs:
- The article draws comparisons between the approval of spot bitcoin ETFs and the greenlighting of the SPDR Gold Shares ETF in 2004. The launch of the first gold ETF changed how investors gain exposure to the gold market and contributed to a substantial rally in gold prices over the past two decades.
Differences Between Gold and Bitcoin ETFs:
- Despite parallels, there are significant differences between gold and bitcoin-linked ETFs, particularly regarding their exposure to different assets. ETFs tied to cryptocurrencies face ongoing regulatory uncertainties and tensions around the concept of bitcoin regulation.
Performance Comparison with ProShares Bitcoin Strategy ETF (BITO):
- The launch of the ProShares Bitcoin Strategy ETF (BITO) in October 2021 is considered a relevant comparison. BITO attracted over $550 million on its first day, primarily investing in bitcoin futures contracts. However, it faced a significant decline of 66.7% in the first two years of trading due to market volatility and a collapse triggered by the FTX exchange.
Investor Caution and Asset Allocation:
- Industry experts, such as Jeff Schwartz from Markov Processes International, emphasize the challenges investors face in gauging the proper asset allocation when dealing with new investment categories. The lack of historical data and understanding of the underlying asset can lead to cautious allocations.
Top and Bottom ETF Performances:
- The ETF Wrap also provides a snapshot of the top-performing and bottom-performing ETFs over the past week. Notable top performers include Sprott Uranium Miners ETF and United States Natural Gas Fund LP, while bottom performers include YieldMax TSLA Option Income Strategy ETF and VanEck Oil Services ETF.
As the spot bitcoin ETFs make their debut, the article highlights the excitement surrounding their launch and the challenges associated with the unique volatility of bitcoin. Comparisons with gold ETFs and cautious investor sentiments underscore the evolving landscape of cryptocurrency-related investment products. Monitoring the performance of these ETFs in the coming weeks will provide insights into their potential role in portfolios and the market’s response to this landmark development
