On January 15, a report by CoinShares revealed that Spot Bitcoin ETFs have gained enormous popularity due to the increased interest of media in them.
Also, James Butterfill from CoinShares shed light on the main beneficiary from this recent injection of funds to the crypto market, as the digital assets investment firm announced an influx of $1.18 billion a little more than a week earlier. Unveiling intriguing insights in the blog post, Butterfill pinpointed the United States as the leading destination for these net inflows.
During the same time frame, the European market received marginal inflows, whereas the North American market accounted for a total of $1.24 billion.
Butterfill comments on the admirable inflows, yet points out that they do not match the impressive amounts seen when Bitcoin futures ETFs were introduced in October 2021, wherein they received a staggering $1.5 billion.
CoinShares highlights the endorsement of a spot Bitcoin ETF by the US Securities and Exchange Commission (SEC) as it justifies the unexpected transition from the European institutional crypto scene to the US market.
According to the report, new information reveals that there has been a significant influx of $1.322 billion into the US institutional crypto market so far this month. This amount matches the total inflow for the entire year. Additionally, the report states that the total assets under management for the US market currently amount to $40.024 billion.
ProShares ETFs in the United States saw a surge of $265 million in investment over the past seven days, with its total inflows for the month reaching an impressive $337.4 million.
In the interim, CoinShares’ analysis found that the US market saw a massive $1.141.8 billion worth of Bitcoin assets coming through, with Bitcoin being made the main recipient of these inflows.
The last two years have witnessed a massive interest in Bitcoin ETFs that has created waves across the emerging cryptocurrency landscape. But their path to receiving regulatory clearance has not been a smooth ride. The securities agency raised valid concerns regarding market manipulation and the lack of efficient mechanisms to monitor the performance of the top crypto asset.
Despite a significant time lapse of two years, the approval for the launch of the cryptocurrency-backed service was finally granted by the US government agency on January 10th.
BlackRock, Fidelity, WisdomTree, and nine additional entities witnessed their spot Bitcoin ETF applications receive the green light from the SEC, with a total of 12 approvals announced.
Canadian Bitcoin ETF Also Impacted
The European landscape is not the only area affected by the consequences of this shift in market dynamics.
In the world of cryptocurrencies, Canada encountered a major downturn as it witnessed substantial outflows in the past week, amounting to a significant -44.2 units. The effects were not limited to Canada alone; both Germany and Sweden also had their share of troubles, experiencing negative impacts of -27 and -15.5 units correspondingly.
According to an informative publication from BitMEX Research on X (previously known as Twitter), it was observed that $30 million had been withdrawn from European markets on January 17th, encompassing the top four European crypto products. However, the overall amount of outflow on that specific day reached a staggering $106 million.
BitMEX Research recently provided an illuminating analysis of the outflows, explaining how European investors are swiftly shifting their funds away from Bitcoin exchange-traded products (ETPs) with excessive fees. Instead, they are opting for spot Bitcoin ETFs available in the US market that offer better cost-effectiveness.
Luke Nolan from CoinShares further unveiled that institutional investors find it more advantageous to utilize a local spot Bitcoin ETF owing to its ability to facilitate identical basis trades.
Frequently Asked Questions:
Why have European investors suddenly become interested in US Bitcoin ETFs?
Its growing popularity could also be linked to the US Securities and Exchange Commission’s (SEC) recent approval of a Bitcoin ETF, making it an increasingly attractive avenue for investment.
What was the aggregate inflow that entered the cryptocurrency market in the last week, and which market eventually got most of these funds?
On January 15, Coinshares unveiled a report that shows an incredible $1.18 billion flowed into the cryptocurrency space. The first recipient of this net influx was determined to be the US market.
What are the implications of spot Bitcoin ETFs’ recent endorsement for the cryptocurrency market dynamics?
However, the emergence of spot Bitcoin ETF acceptance also led to a shift in market scenery moving European investors to quickly transfer their investments from costly ETPS to cheaper spot Bitcoin ETFs available on the US market.
Why does the approval of spot Bitcoin ETFs by the SEC on January 10, 2023, hold importance?
In a groundbreaking move, the SEC has granted the green light to a dozen applications for Bitcoin ETFs. This decision encompasses notable players in the financial arena, like BlackRock, Fidelity, and WisdomTree, signifying a transformative moment for the crypto-backed sector after a prolonged two-year hiatus.
What was the effect of the introduction of spot Bitcoin ETFs on various international markets, specifically in Canada and Europe?
The consequences of the approval extended further than just the domestic market of the United States. Canada observed noteworthy withdrawals from investors, leading to a significant decline in value. In parallel, European markets, including Germany and Sweden, encountered remarkable capital outflows. Notably, European investors opted to transfer their funds from high-fee Bitcoin ETPs to more accessible and economically efficient spot Bitcoin ETFs available in the United States.
According to the CoinShares report, how much did the US market’s assets under management (AUM) amount to?
The institutional crypto market in the United States has witnessed an impressive surge, with a substantial increase in the total assets under management (AUM), reaching a remarkable $40.024 billion. This highlights the strong growth and rising enthusiasm for this sector.
What was the effect of the approval of spot Bitcoin ETFs on ProShares ETFs in the United States?
Investors in the United States displayed a favourable reception towards the new investment options offered by ProShares ETFs, as evidenced by the $265 million of funds attracted in the previous week. Moreover, the inflows for the month-to-date (MTD) period climbed to an impressive $337.4 million.
What made European investors prefer the convenience of employing a local Bitcoin ETF for their investment?
CoinShares and BitMEX Research have revealed that European establishments have discovered greater convenience in adopting a localized spot Bitcoin ETF. This stems from their ability to seamlessly carry out identical basis trades, along with the cost-effectiveness exhibited by these investment products. In contrast, Bitcoin exchange-traded products (ETPs) with excessive fees fail to match up to such benefits.