US Bitcoin ETFs’ Failed on the Expectations, 2-Day Net Inflows at $819 Million

Bitcoin experienced a substantial correction following the approval and listing of the much-hyped 11 spot Bitcoin exchange-traded funds (ETFs) in the United States. At one point on Friday, the cryptocurrency's value decreased by approximately 10 percent, falling from the previous day's peak of $49,000 to below $42,000. However, it has since rebounded and is currently trading at around $42,700 at the time of writing.

Disappointing Demand for Bitcoin ETFs

Why did the market go in the other direction despite the massive anticipation for Bitcoin ETFs? Even experts previously anticipated that the ETFs would ease the entry barrier for retail and institutional investors to get crypto exposure directly from their brokerage accounts.

Although it has been only two days since the 11 Bitcoin ETFs have traded on the US exchanges, the numbers have been disappointing.

The ten newly listed Bitcoin ETFs attracted only $1.4 billion in new funds within two days. Despite the anticipation surrounding their launch, none of the recently introduced Bitcoin ETFs achieved top rankings among US ETFs based on their initial success.

Along with the poor inflows, Grayscale’s Bitcoin ETF, which was converted from the Grayscale Bitcoin Trust, witnessed an outflow of $579 million, and the previously existing BITO futures ETF endured $151 million in outflows. Considering these figures, the two-day net inflows in the Bitcoin ETFs are only $652 million, while the net spot Bitcoin ETF inflows was at $819 million.

Inflows into the 10 new bitcoin ETFs hit +$1.4 billion over 2 days.Subtracting GBTC's outflows of -$579m we get a net inflow of +$818.9m into the 10 new vehicles.People rotating out of GBTC into the others & Grayscale selling BTC are behind the price dump despite the inflows: pic.twitter.com/L29Vp3QecP

The Hype Could Not Pump New Monies

Although the industry created the hype around the US Bitcoin ETFs, such instruments were already available in several other countries. However, the capital market size of those countries is not comparable to that of the US.

Canada launched the Purpose Investments Bitcoin ETF in February 2021, and within the first two days of trading, the Canadian Bitcoin ETF accumulated assets under management (AUM) totaling $421 million. Meanwhile, the Bitcoin ETFs launched by the two financial giants, BlackRock and Fidelity, currently boast AUMs of $498 million and $422 million, respectively.

Interestingly, the Canadian Bitcoin ETF charges 1.5 percent in fees, while the US one is taking an economical approach, with the lowest fees being 0.2 percent (excluding conditional fee waivers).

After the two performances of the US Bitcoin ETFs, the long-term predictions of the inflows appeared to be long-shots. Bloomberg predicted a $4 billion inflow on the first day and $50 billion by the year's end, while analysts at Standard Chartered were more bullish, eying $100 million by the end of 2024.

@BlackRock may break the first-day flow record with a possible $2 billion asset injection on the first day of trading for its US spot Bitcoin ETF, according to BI's senior ETF analyst @EricBalchunas Seed funding could combine with grassroots interest to give it momentum in a… pic.twitter.com/cjUoSzsqgt

Meanwhile, the stock price of the largest US Bitcoin exchange, Coinbase, is plunging about 30 percent from December’s peak. On last Friday’s trading session alone, Coinbase stock declined 7.35 percent, shedding one more percent-point in after-hours trading.