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Bitcoin's Wall Street welcome. 🍾 At 15-years old, bitcoin’s approved entry onto the US share markets in the form of bitcoin ETFs may be a case of better late than never. Now investors wanting to get their hands on bitcoin can do so without actually getting their hands on bitcoin.
Peer-to-peer, decentralised electronic cash system bitcoin, which uses blocks, forming a blockchain to permanently record every transaction on a digital ledger, was the toast of Wall Street’s trillion-dollar fund managers this January, attracting orders of nearly US$1 billion in the first two days of trading.
Asset managers that pushed for SEC bitcoin ETF approval to list on the US share markets, including ARK Investments, BlackRock, Fidelity Investments and Invesco, were among 11 which were granted approval to offer bitcoin ETPs (exchange traded products). The shares are offered as bitcoin exchange traded funds (ETFs), which closely track the US$40,122.23 asset’s price per token (value at the time of writing). As part of arrangements to list on the NYSE, Nasdaq and Cboe (the Chicago Board Options Exchange), fund managers are required ‘to ensure trading is liquid and efficient’.
Bitcoin ETFs battle of the fees
BlackRock surges; Grayscale’s move from the OTC market sees shareholders sell up. 💸 Most fund managers offering bitcoin ETFs have used fee freezes to entice investors, a tactic that benefited some and took from others. In the first few days of stock listings, US$579 million surged away from bitcoin fund pioneer, Grayscale Bitcoin Trust (GBTC), which has the highest fee rate at a 1.5% expense ratio. While BlackRock’s iShares Bitcoin Trust (IBIT) benefited from the lion’s share of bitcoin ETF trading volume, with US$508 million stock trades in two days, and Fidelity Wise Origin Bitcoin Fund (FBTC) coming in behind, with US$422 million of shares traded in the same time frame.
Bitcoin ETF trading volumes. 📈 In the seven days since listing on Thursday 11 January until Friday 19 January 2024, trading volumes accelerated to a total of 481,253,012 bitcoin ETF shares traded with a total value of US$16,702,686,800.96. Despite these record levels and fee waivers, all bitcoin ETFs have seen their share value shrink:
- ARK 21Shares Bitcoin ETF (ARKB) has annual fees of 0.21% waived for first 6 months or until US$1 billion AUM (assets under management) and has seen stock value drop by 16.54%
- Bitwise Bitcoin ETP Trust (BITB) has 0.2% fees waived in first 6 months for the first US$1 billion AUM and their stock value has dropped by 15.19%
- BlackRock’s iShares Bitcoin Trust (IBIT) fees 0.25% but at 0.12% for first 12 months or until US$5 billion AUM with their stock falling 14.82%
- Fidelity Wise Origin Bitcoin Fund (FBTC) has 0.25% fees waived until August 1 2024 and has seen a stock value decline of 13.10%
- Franklin Bitcoin ETF (EZBC) has 0.29% fees and their stock value has decreased by 16.02%
- Grayscale Bitcoin Trust (GBTC) has 1.5% fees and despite large stock sell-off likely due to having the highest fees, has seen stock value fall the least amount, by 12.40%
- Tidal Commodities Trust I-Hashdex Bitcoin Futures ETF (DEFI) has 0.9% fees and their stock has had the highest value decrease of 17.09%
- Invesco Galaxy Bitcoin ETF (BTCO) has 0.39% fees waived in first 6 months for the first US$5 billion AUM and the large fund manager has seen a share decline of 13.64%
- Valkyrie Bitcoin Fund (BRRR) 0.25% fees waived in first 3 months and their stock value waived in first 3 months and their stock value had the second highest decline, of 16.17%
- VanEck Bitcoin Trust (HODL) 0.25% fees with stock falling 14.47%
- WisdomTree Bitcoin Fund (BTCW) 0.3% fees waived in first 6 months for the first US$1 billion AUM and their stock value has dropped 13.31%
Are bitcoin ETFs FOMO stocks?
If you can’t beat ‘em, join ‘em? 🤷♀️ Cryptocurrencies have come off the back of a couple of headline-hitting years, rounding out 2023 with the end of the so-called crypto winter, and seeing failed crypto exchange FTX’s founder, Sam Bankman-Fried, found ‘guilty of defrauding FTX customers out of billions’ - awaiting sentencing this March, facing as much as 100 years in prison.
In the same year however, Bitcoin (BTC-USD) grew 150% taking with it some US share market stocks, including Coinbase (COIN), MicroStrategy (MSTR), Grayscale Bitcoin Trust (BTC, GBTC) and bitcoin miner Marathon Digital (MARA), which surged ahead 688%.
The SEC’s ‘deeply skeptical’ sign-off
It wasn’t just a handful of bitcoin ETFs’ punny stock tickers - like BRRR, HODL and EZBC - that made the SEC ‘deeply skeptical’ about bitcoin ETF approval. Twenty-four hours after an alleged ‘unauthorized’ tweet that falsely pre-empted bitcoin ETP share approval, the SEC officially announced it on their website.
In their statement, SEC chair Gary Gensler made clear the difference between regulated ETPs on US share markets versus the bitcoin asset itself, saying:
‘...bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.
‘While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.’
Gensler also reminded both investors and fund managers that bitcoin ETF approval action ‘does not approve or endorse crypto trading platforms or intermediaries, which, for the most part, are non-compliant with the federal securities laws and often have conflicts of interest’.
Bitcoin ETF protection for investors
Three benefits of bitcoin ETFs being listed on US share markets. The SEC’s bitcoin ETF approval means shareholders gain some protection for their stocks traded on the three large market cap registered national securities exchanges, including:
- Full, fair, and truthful disclosure about the products, including public registration statements and periodic filings
- Rules designed to prevent fraud and manipulation, with continuous SEC monitoring and investigations where fraud or manipulation is detected, including in social media
- The simultaneous approval of 11 total bitcoin ETF listings helps to create a level playing field for issuers that aims to promote fairness and competition, and gives investors greater choice
Hatch’s most popular bitcoin ETFs
Hatch investors dug into their post-holiday pockets and spent nearly $600,000 NZ dollars on freshly minted Bitcoin ETFs the moment they landed on the US share markets.
Which fund manager rose to the top of the (stock)pile? 🤨 One of the world's largest investment firms, BlackRock’s iShares Bitcoin Trust (IBIT) gained nearly half of your trust and money in the first few days, with the ARK 21Shares Bitcoin ETF (ARKB) coming in a not-even-close second. Perhaps BlackRock’s low 0.12% first 12-months fees, their accelerating return on investment over the years, and commitment to gender equality and climate remediation resonates with Kiwis?
Whether or not bitcoin continues on its ‘controversial and volatile’ ride, some believe the SEC’s approval of bitcoin ETFs may hail in an era of more mainstream acceptance of cryptocurrencies.
Like this? 👍 Then you might like: Hatch investors' 2023 Year in Review 🗓️
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We’re not financial advisors and Hatch news is for your information only. However dazzling our writing, none of it is a recommendation to invest in any of the companies or funds mentioned. If you want support before making any investment decisions, consider seeking financial advice from a licensed provider. We’ve done our best to ensure all information is current when we pushed ‘publish’ on this article. And of course, with investing, your money isn’t guaranteed to grow and there’s always a risk you might lose money.
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