BlackRock's spot ETF size exceeds $1 billion

Even as the price of Bitcoin falls, the inflow of funds into Bitcoin ETFs remains considerable; on Wednesday, BlackRock's Bitcoin ETF welcomed an inflow of $371 million, helping it to break the $1 billion mark.

Bitcoin's rally has receded significantly this week, with prices down about 11% since Jan. 10, when the U.S. Securities and Exchange Commission approved a bitcoin ETF.

Bartosz Lipinski, CEO of trading platform Cube.Exchange, said that the hype about Bitcoin ETFs has weakened and traders' attention may shift to other places. Current options data shows that the support price of Bitcoin is around $40,000.

However, while investors have temporarily called off their investment in Bitcoin, the underlying asset, its derivative ETF funds continue to be popular. Data showed that investors deposited $371 million into BlackRock's Bitcoin ETF on Wednesday, pushing the fund's total size above $1 billion, making it the first Bitcoin ETF to break $1 billion.

In addition, Fidelity's Bitcoin fund has reached $880 million, close to the $1 billion mark. Together, these two funds have captured 68% of the inflows into Bitcoin ETFs, totaling nearly $2 billion.

Hot 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 a lot of hidden power.

According to media investigations, a large part of the funds flowing into Bitcoin ETFs such as BlackRock and Fidelity came from Grayscale's Bitcoin ETF. The fund was previously a trust fund and then converted to an ETF. The funds under management once exceeded US$28 billion, but currently US$1.6 billion of funds have flowed out.

One of the main reasons why investors left Grayscale is that the management fees are too high. Grayscale's Bitcoin ETF management fee rate is currently the highest in the industry, reaching 1.5%. According to media reports, BlackRock and Fidelity currently set management fees of only 0.2% and 0% respectively to attract investment.

As ten Bitcoin ETFs were listed at the same time, fierce competition has been set off in the industry, and the management fee rate is currently the most important bargaining chip for major funds. For example, Fidelity has promised to waive management fees for investors until July 31.

Others resorted to "cheating" tactics. Ark Asset Management, managed by well-known Wall Street investor Cathie Wood, is snapping up its own Bitcoin ETF, using its sister fund to purchase the Bitcoin ETF (ARKB).

Industry insiders pointed out that this move is a bit like "cheating", but it is not against the rules, and other people in the industry may also use it. Other Bitcoin ETF issuers may put the product into the model portfolio or take other ways to increase holdings.

In the face of fierce competition, Grayscale's mentality is as steady as an experienced driver. Zach Pandl, managing director of Grayscale Research, pointed out that Grayscale has dominated Bitcoin investment for more than a decade, and now that other issuers have entered the market, it is understandable that funds will flow to other new products.

He also said that flows from one Bitcoin ETF to another will not change the sentiment of the industry, and the total net inflow is the basis for measuring value.

Nate Geraci, president of ETF Store, pointed out that if Bitcoin ETF continues to attract funds, issuers will be more bold in launching various products, including leveraged, inverse and option-based Bitcoin ETF strategies.