Minus instead of plus: initial results of trading in spot ETFs

Bitcoin spot ETF trading began on Thursday, January 11. The number of approved exchange-traded funds was 11. The average decrease in the price of shares, coincidentally, over two days was approximately 11%.

Start of trading

The anticipation of the emergence of spot ETFs has been exciting the crypto industry for almost six months. Almost all experts unanimously stated that the approval of this product by the US regulatory agency would be the next step towards the full acceptance of cryptocurrencies and should lead to the growth of Bitcoin and altcoins. On January 10, a significant event did happen. And what has changed?

Firstly, there is no talk of any Bitcoin rally. Moreover, by Sunday, January 14, BTC had already dropped below $43,000. Whereas on January 11, at some point it climbed above $49,000.

Secondly, the value of the ETF shares themselves, like a carbon copy, first grew and then fell sharply. Undoubtedly, BlackRock, Fidelity, Valkyrie and other investment companies that stand behind the funds did not lose out. What about investors?

So far, this is increasingly reminiscent of the situation with some kind of IPO on the stock market, when the placement is extremely expensive. As soon as trading begins, the price goes higher and then collapses, which leads to losses for everyone who fell for the cheap hype.

It is premature to say that ETFs have not lived up to, or better yet will not live up to, expectations.. Fall and rise in value are natural processes with free pricing. One way or another, cryptocurrency occupies an increasingly larger place in people’s lives every year, and spot ETFs give large investors a new opportunity to invest (not directly) in digital assets.

In order not to be unfounded, we will consider the situations that arose when trading with each of the 11 exchange-traded funds separately.

Bitwise Bitcoin ETF

The management company of this fund is Bitwise. ETF is not its only crypto product. Under the patronage of Bitwise there are such funds as: Bitwise Bitcoin and Ether Equal Weight Strategy ETF, Bitwise Ethereum Strategy ETF, Bitwise Bitcoin Strategy Optimum Roll ETF and others. Units (shares) of the fund (note: in the future in this article we will define share as units for the convenience of the Russian-speaking audience) are traded on the New York Stock Exchange (NYSE) under the ticker BITB. There are 10.18 million of them in circulation.

The fund’s commission is one of the smallest (lower only for Franklin Bitcoin ETF) — 0.2%. It will not be charged for the first six months or until the fund's assets under management reach $1 billion.

The fund's shares began trading at $26.8 and quickly reached $28.5. Then, however, everything changed. The bears pushed the bulls aside, and the price the day after the launch, January 12, fell to $23.82. However, at closing BITB was slightly more expensive – $23.96. Losses over the first two days of trading amounted to 10.6% relative to the opening price.

Source: tradingview.com

Invesco Galaxy Bitcoin ETF

The name of the fund immediately indicates that there are two companies behind it: the investment company Invesco and one of the leaders in blockchain development, Galaxy Digital. The units are traded on the CBOE exchange where they can be found under the ticker symbol BTCO. A total of 1.14 million securities are in circulation. This ETF is a reflection of the spot price of BTC, measured by the aggregated Lukka Prime Reference Rate.

The fund's commission was one of the largest among approved ETFs — 0.39%. For six months (counting from January 11), or until the number of assets under management of the fund reaches $5 billion, the commission will not be withheld.

Unit trading began at $48.13. During the first half hour of trading on January 11, it rose to $50.18. However, this mark turned out to be a local maximum. Afterwards, the price dived down, reaching $43.42 on January 12. Friday's trading ultimately ended at $43.86, down more than 8.5% from its Jan. 11 opening.

Source: tradingview.com

Valkyrie Bitcoin Fund

This fund is from Valkyrie, which provides financial services at the intersection of traditional finance and digital assets. The units are traded on the NASDAQ exchange under the ticker symbol BRRR. They are designed to reflect the movement of the Bitcoin price, which is taken as the aggregated rate CME CF Bitcoin Reference Rate ‒ New York Variant.

The commission to the fund manager is 0.25%. It will not be paid for the first three months. Bitcoins held by the fund are officially stored in a cold wallet.

This ETF was initially offered at $14.1. Then it rose to $14.9 and began to fall. The minimum was reached on January 12 and amounted to $12.38, after which the fund’s share rose slightly to $12.47. However, since its opening, BRRR has lost 11.57%.

Source: tradingview.com

Franklin Bitcoin ETF

The investment holding company behind this fund is Franklin Templeton Investments. The ETF trades on the Chicago Board Options Exchange (CBOE) under the ticker symbol EZBC. There are a total of 1.95 million shares in circulation.

The fund's activities are based on reflecting the movement of the price of Bitcoin before paying expenses to the manager. The main distinguishing feature is the lowest commission among all approved ETFs — 0.19%. Initially it was 0.29%, but on Friday, January 12, it was changed. The fund management company will not receive any commissions until August 2, 2024, or until the Franklin Bitcoin ETF reaches $10 billion in assets under management..

So far, over two days of trading, EZBC fell by 11.84%. The fund's shares began trading at a maximum of $28.83, but were not yet destined to rise higher. At the auction on January 12, the price fell minimally to $25.23, closing slightly higher at $25.42.

Source: https://ru.tradingview.com

WisdomTree Bitcoin Fund

Fund from New York-based asset manager WisdomTree Investments. Units trade on CBOE under the ticker symbol BTCW. The number of securities in free circulation reaches 70,000.

The fund's commission is 0.3%. It will not be paid for the first six months, or until the fund's assets under management reach $1 billion.

The dynamics of BTCW trading in the first two days turned out to be negative. The opening price on January 11 was $51.17. Then within 45 minutes it jumped to $53.22, and then the collapse began. The Jan. 12 close was $46.61, down 8.91% from Thursday's open. At the same time, the minimum on Friday was even lower – $46.19.

Source: https://ru.tradingview.com

Hashdex Bitcoin Futures ETF

This ETF is interesting because its management company is not an American investment company, but the Brazilian crypto investor Hashdex. The Hashdex Bitcoin Futures ETF began trading on the NYSE back in September 2022 under the ticker DEFI. But then it was exclusively a Bitcoin futures fund. Now it has been converted into a spot ETF with the same name and ticker. The number of shares in circulation is 320,000.

The fund's commission is the second largest among all approved ones and amounts to 0.9%. If most funds have some kind of concessions (for example, that the commission will not be paid to the management company for six months), then there is no such thing here. Perhaps this is due to the fact that the fund is essentially not new, but converted.

In general, until the Hashdex Bitcoin Futures ETF became a spot ETF, it was growing all the time. However, the first two days in the new status led to a price decrease of 12.68%. Opened on Thursday, January 11, at $60. On the same day, DEFI rose to $64.18. Then came the fall. At the minimum on January 12, the price reached $52.1, and the position was closed at $52.39.

Source: https://ru.tradingview.com

Fidelity Wise Origin Bitcoin Fund

The fund's parent organization is the American company Fidelity, which is one of the leaders in the local financial market. The fund trades on the CBOE under the ticker symbol FBTC. The number of shares in circulation is 500,000.

The fund's commission is 0.25%. It will not be paid to the management company until July 31, 2024. The fund's assets are 100% bitcoins. The fund's performance will follow the price of BTC using the Fidelity Bitcoin Reference Rate.

FBTC started trading very quickly on January 11th. At the opening the price was $41.99, and two minutes later it reached $50.7 (an increase of more than 20%). However, after that it fell no less quickly. At auction on January 12, the price reached $37.95, rising to $38.35 at closing. In two days from the opening, the fund's share price fell by 8.67%.

Source: https://ru.tradingview.com

iShares Bitcoin Trust

iShares Bitcoin Trust is a spot Bitcoin ETF from the world's largest investment company BlackRock. Trading takes place on the NASDAQ exchange under the ticker IBIT. The number of shares in free float is 4.6 million.

The fund's commission is 0.25%. There will be no payment to its management company for a year (the longest period among all bitcoin spot exchange-traded funds approved on January 10), or until the ETF has $5 billion under management.

The first two days of trading for IBIT were in bearish territory. Although in the first half hour of January 11 the fund grew from $27.94 to $30, then there was a drop to $24.75 and a slight increase at closing to $24.97. As a result, the fund’s share price fell by 10.64% in two days.

Source: https://ru.tradingview.com

VanEck Bitcoin Trust

This fund is the brainchild of the American management company VanEck. The fund was originally a trust and has only now become a spot Bitcoin ETF. The units trade on the CBOE under the ticker symbol HODL. Total free circulation = 1.65 million.

The fund's commission is 0.25%. There were no reports of possible non-payments. Again, as with the Hashdex Bitcoin Futures ETF, the fund is convertible.

The trading pattern for this HODL on January 11 and 12, 2024 is not much different from the other instruments described above. Having opened at $55.2, the share price initially saw a slight rise to $56.42. And then everything follows the same pattern: a decline to $49.26 and a slight rise before closing to $49.62. The final decrease over two days from the opening was 10.11%.

Source: https://ru.tradingview.com

Ark 21Shares Bitcoin ETF

There are two large companies behind the fund: Cathie Wood’s Ark Invest investment company and 21 Shares, which specializes in creating ETPs. This ETF trades on the CBOE under the ticker symbol ARKB. There are a total of 1.625 million shares in circulation.

The fund has a fairly small commission — 0.21%. It can be waived for six months or until the volume of assets under the fund’s management reaches $1 billion. The fund follows changes in the price of Bitcoin, which is measured by the aggregated rate CME CF Bitcoin Reference Rate – New York Variant.

Over two trading days on January 11 and 12, the price of ARKB decreased by 12.28%, from $50 to $43.86. It is worth noting: first the price rose to $52.22, and then dropped completely to $43.5. Nevertheless, it was not possible to stay at the extremes.

Source: https://ru.tradingview.com

Grayscale Bitcoin Trust

This is the same fund from Grayscale, the conversion of which was prohibited by the Securities and Exchange Commission (SEC) for a long time. Actually, that’s why the word Trust remains in the name, since until now the fund was a trust, and not a spot Bitcoin ETF. The fund is traded on the NYSE under the ticker symbol GBTC. There are slightly more than 690 million shares in circulation.

The fund has the highest commission of all that were approved on January 10 — 1.5%. Moreover, before January 11 it was even higher – 2%. There have been no reports from Grayscale that commissions will not be paid to the management company.

The first two trading days for GBTC as a spot Bitcoin ETF ended with a decline of 8.69%. At first, like almost all competitors, there was an increase: from $42.25 to $43.5. And then on January 12 there was a decline to $37.77 and a slight pullback to close at $38.58.

Source: https://ru.tradingview.com

Conclusion

Thus, the first two days of trading for all spot Bitcoin ETFs that were approved on January 10 turned out to be negative. The fall ranged from 8.67% for the Fidelity Wise Origin Bitcoin Fund to 12.68% for the Hashdex Bitcoin Futures ETF. The price movement pattern was identical in almost all cases: first an opening, then an increase in the first half hour, then a decrease for two days, which ended with a slight increase before closing on January 12. The average decline across the 11 funds was 10.44%.

This material and the information contained herein do not constitute individual or other investment advice. The opinion of the editors may not coincide with the opinions of the author, analytical portals and experts.