ETF History Made: BlackRock and Fidelity’s Bitcoin Launches Become the Talk of Wall Street

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Tim Hakki

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Tim Hakki

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February 9, 2024

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Interest in market leading spot Bitcoin ETFs has exploded one month after launch, according to Bloomberg’s Senior ETF analyst Eric Balchunas.

Balchunas posted a multi tweet thread on X crunching the numbers behind the newly launched Bitcoin investment products. BlackRock and Fidelity’s ETFs took first and second place respectively, attracting over $6 billion in funds since their launch on January 10.

Of course GBTC is a factor here and so I guess you could argue some of the Nine's aum is BYOA? Not enough tho for me to write any of this off as a lot of GBTC outflows were FTX and prop traders arbing the discount which is cash likely not destined for another btc ETF. I think the…

— Eric Balchunas (@EricBalchunas) February 8, 2024

That means the two have comfortably flipped all opposition from more stalwart ETFs like Invesco’s QQQ, which holds shares in the top non-financial publicly traded companies, the NASDAQ 100, a list that includes Apple, Google, Microsoft and Tesla.

Balchunas also explained that money poured into the Bitcoin funds every single day of the month. This is important to note, because the assets-under-management (AUM) metric can be misleading when a sole investor or a small group are responsible for all of the inflows.

Spot Bitcoin ETFs by Bitwise and Ark Invest also made the list, coming in 21st and 22nd respectively.

Grayscale already made ETF history

Grayscale’s GBTC, which is technically the largest ETF at $21 billion AUM, did not make the list because it had a decade-long headstart. GBTC started life as a Bitcoin fund in 2013, but it wasn’t until mid-2015 that shares began publicly trading under the ticker GBTC.

Since the US Securities and Exchange Commission approved the ETFs last month, Grayscale’s has been the only one posting outflows: $6 billion in fact. This is because for years the fund had been trading at a discount to its underlying asset, due to its closed-end structure. There were a fixed number of shares and no new ones could be created.

The closed-end structure evaporated along with the discount after GBTC converted to an ETF. Many holders exited their positions to pocket a tidy profit, including the estate of disgraced former crypto exchange FTX, which sold 22 million GBTC shares recently and may have raised a billion from it.

Still, if Wall Street is lapping up BlackRock and Fidelity’s Bitcoin ETFs today, it’s only because Grayscale made it possible.

Grayscale had created the Bitcoin Trust with an eye to its eventual conversion into an ETF. In 2022, the SEC refused its application. Grayscale took the matter to a Federal appeals court and on August 29, 2023, scored a landmark victory for the industry when Judge Neomi Rao overturned the SEC’s rejection, calling it “arbitrary and capricious.”

It may have been just another Tuesday in Washington, but it was a defining moment in crypto and ETF history.