Bitcoin (BTC) experienced a significant upswing as it ticked down to $34,350, with institutional investment vehicles showing a major increase in trading volume.
This surge in activity is driven by the growing enthusiasm surrounding potential regulatory changes in the United States.
Data from various sources, including Bloomberg, has revealed that Bitcoin exchange-traded funds (ETFs) and other institutional investment options are approaching record levels of weekly inflows.
Notably, the ProShares Bitcoin Strategy ETF (BITO), the first futures-based ETF approved in the United States in 2021, recorded remarkable trading activity. The ETF market, now backed by considerable investments, has demonstrated its potential to become a significant player in the cryptocurrency space.
Eric Balchunas, a senior ETF analyst at Bloomberg, reported that BITO traded a staggering $1.7 billion in a single week, marking its second-highest weekly volume since its inception.
Additionally, the Grayscale Bitcoin Trust (GBTC) saw $800 million in trading volume, effectively reducing its discount to the Bitcoin spot price to a two-year low.
This resurgence in institutional investment vehicles comes as a response to the anticipation of the United States potentially allowing a Bitcoin spot price-based ETF. While it remains uncertain when such an ETF will be approved, the surging interest in futures-based ETFs and trust funds reflects the growing demand for cryptocurrency exposure among institutional investors.
According to Cointelegraph, William Clemente, co-founder of crypto research firm Reflexivity, commented that ETF trading is “back in full steam,” underscoring the renewed interest and enthusiasm among investors.
GBTC, in particular, has made a remarkable comeback in recent months, even before Bitcoin’s 15% price increase last week. This resurgence can be attributed to legal victories that set the stage for GBTC’s potential transformation into a spot ETF.
While Grayscale’s product now trades with an implied share price just 13.1% below the BTC spot price, indicating a notable narrowing of the GBTC discount, investment management firm ARK Invest has decided to reduce its GBTC holdings in tandem with the share price gains.
Despite this, ARK Invest is gearing up for the launch of a Bitcoin spot ETF, while GBTC continues to hold a significant portion of its ARK Next Generation Internet ETF, marking a significant change since November 2022.
The latest developments in the institutional investment space indicate that the cryptocurrency market is evolving rapidly, with more avenues for traditional investors to participate in the digital asset revolution. As the United States moves closer to potentially allowing a Bitcoin spot price-based ETF, the enthusiasm and confidence in the future of cryptocurrencies are only expected to grow.
