Less than three weeks have passed since the market launch, and BlackRock’s Bitcoin ETF (IBIT) has already surpassed two billion dollars in assets under management (AUM).
According to official data, IBIT already owns more than 52,000 BTC, with a dollar value exceeding 2.1 billion.
These data, moreover, are growing because they do not yet include the additional purchase of at least another 2,000 BTC made yesterday.
Before the market launch, BlackRock had anticipated the need to purchase up to $2 billion worth of BTC in the first week alone, but it took two and a half weeks to achieve this goal.
Summary
The other Bitcoin ETFs: not just BlackRock
At the moment, the world’s largest Bitcoin ETF by AUM is still the Grayscale Bitcoin Trust (GBTC), which until yesterday held 496,000 BTC.
However, it should be highlighted that before the stock market listing on January 11th, it held almost 620,000 BTC, so in just under three weeks it has liquidated over 120,000 Bitcoin.
That being said, currently GBTC’s AUM is still over 21 billion dollars. However, it is highly likely that these values could still decrease, even though the pace at which they are currently liquidating BTC has practically halved from last week’s peaks.
The interesting thing is that by adding up the BTC purchased in these two and a half weeks from all the new ETFs, excluding GBTC, you get a figure higher than 130,000 BTC, which is higher than the number of BTC sold by Grayscale.
So overall the balance is positive: since the new ETFs on Bitcoin spot were launched on the US stock exchanges, they have increased the number of BTC they own, despite the strong liquidations of the Grayscale ETF.
For example, FBTC, which is Fidelity’s Bitcoin ETF, has reached over 46,000 BTC, a figure not much lower than that of IBIT.
Further back there are ARKB (Ark’s ETF) with over 14,000 BTC and BITB (Bitwise’s ETF) with 13,500 BTC. Further behind are Invesco’s BTCO (6,800 BTC), and VanEck’s HODL and Valkyrie’s BRRR with less than 3,000 BTC each.
The trading volumes of Bitcoin spot ETFs: Grayscale and BlackRock
The trading volumes of the new Bitcoin ETFs are no longer as high as those of the launch days, but they remain interesting.
Actually, there is a data that turns out to be particularly interesting: yesterday, at the opening, the trading volumes of IBIT had surpassed those of GBTC for the first time.
At the end of the day, GBTC closed with 576 million dollars of daily trading volumes, while IBIT stopped at 469 million, but at this rate the overtaking seems highly probable.
The fact is that GBTC has been around for about 11 years, although it only became an ETF on January 11th (previously it was a fund whose shares were only traded OTC).
During the launch days, GBTC recorded daily trading volumes of about 2 billion dollars, compared to IBIT’s one billion dollars on the first day (January 11th), followed by 574 million on the second day (January 12th).
Comparing yesterday’s data with that of January 12th, it is discovered that for IBIT the difference is minimal, while for GBTC it represents a reduction of 68%.
The downward parable of GBTC
GBTC, or the ETF of Grayscale Bitcoin Trust, is facing two problems that are greatly reducing its presence in the markets.
The first reason is that over the years he had accumulated too many BTC compared to the success of his stocks on the markets.
In particular, the speculative bubble of 2021 effectively forced Grayscale to purchase too many BTC that it was then unable to easily liquidate due to not being an ETF.
Just converted into an ETF, it started the liquidation process that was supposed to begin two years ago, and that had not yet happened during this time.
The second problem is the excessively high commission costs, five times higher for example compared to those of IBIT.
However, it must be said that according to some analysts, this downward trend could come to an end this very week, or that the phase of significant decline in the AUM of this ETF may already be behind us. In fact, yesterday they liquidated less than 9,000 BTC, while last week there was a daily peak of over 19,000 BTC liquidated.
The danger of centralization
Although the BTC in the hands of ETFs currently are not many more than those at the beginning of January, the problem related to the risks of an increase in centralization arises.
In the future, it is possible that ETFs as a whole will increase their ownership of BTC, and since the rate of new creation of BTC cannot be increased, this means that the centralization of custody will effectively increase.
On one hand, it is a less serious risk than it may seem at a superficial analysis, because the true owners of ETFs are the thousands of shareholders who own the shares, and not the individual managers.
But the custody of their BTC is absolutely centralized, so much so that several ETFs (including the two largest) entrust them to Coinbase Custody.
In fact, Coinbase is now the largest custodian in the world of Bitcoin, second only to Satoshi Nakamoto, who has been missing since 2011.
This poses risks because in the event, for example, of an attack on Coinbase systems, there is a serious risk that someone could seize huge amounts of BTC and then sell them on the market, causing the price to drop.
Even in the event of the failure of some ETF, it is possible to hypothesize some similar risks, although the managers should be controlled and monitored.
The beauty of Bitcoin is that, if the public custody addresses are known, it is possible to personally and independently verify that all the BTC that the managers claim to have are actually there.
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