Over the last three days, nine new exchange-traded funds (ETFs) tracking the spot price of Bitcoin have attracted strong investor interest, with investors pouring in $1.9 billion. However, it remains to be seen whether they will be able to maintain this pace of inflows in the coming weeks. It is noteworthy that the funds have outpaced post-launch flows into the ProShares Bitcoin Strategy ETF, which drew a record $1.2 billion in the first three days of trading after its 2021 launch. The SPDR Gold Shares ETF attracted $1.13 billion in the first three days after its 2004 launch.
Despite the lower-than-expected inflows, market participants are optimistic about the future of the ETFs. Some bullish analysts have predicted that the flows could reach between $50 billion and $100 billion by the end of the year. However, it remains to be seen how much retail and institutional investors will continue to invest in the notoriously volatile cryptocurrency and which issuers will come out ahead.
The iShares Bitcoin Trust ETF from asset management giant BlackRock has attracted more than $700 million, while Fidelity’s Wise Origin Bitcoin Fund has topped $500 million, according to BitMEX Research, a cryptocurrency research, and analysis firm. Lower fees and name recognition appear to be key factors in drawing investors. Before waivers, fees among the nine issuers range from a low of 0.19% to a high of 0.39%. Nonetheless, BlackRock is charging a fee of 0.12% for the first $5 billion in assets and the first 12 months of trading, which will rise to 0.25% after that. Fidelity is initially charging zero, rising to 0.25% after July 31.
The launches of these long-awaited ETFs on Jan. 11, a day after receiving approval from the U.S. Securities and Exchange Commission (SEC), have lived up to the hype so far, says Todd Sohn, an ETF analyst at Strategas. However, the next question is what is the staying power of these ETFs? What will their flows look like in the future? Will investors still be attracted to them in six months’ time or six years from now? Only time will tell.