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Bitcoin Spot ETFs Hits $150 Billion Trading Volume Milestone Amid Market Mayhem — What’s Next?

bitcoinist.com - 周四, 03/21/2024 - 05:00

As of the latest data, the US spot Bitcoin Exchange-Traded Funds (ETFs) have surged past a notable milestone, with cumulative trading volume breaching the $150 billion mark on March 19.

This development is particularly noteworthy considering the spot ETFs‘ relatively short period in the market, following their approval by the Securities and Exchange Commission (SEC) less than three months ago.

However, despite this milestone, the market has not been without its challenges. Record net outflows were also observed amid a notable dip in Bitcoin’s price yesterday.

Record Trading Volumes And Market Dynamics

The achievement of surpassing $150 billion in cumulative trading volumes for US spot BTC ETFs reflects a significant interest and participation in the cryptocurrency market. Notably, a substantial portion of this volume was recorded in a relatively short span, with $50 billion added since March 8 alone.

Additionally, yesterday alone, trading volumes reached $5.6 billion, led by BlackRock’s IBIT, Grayscale’s GBTC, and Fidelity’s FBTC, highlighting the active engagement of investors with these financial instruments.

However, this enthusiasm has been tempered by a significant market shift, with Grayscale’s GBTC experiencing a “squeeze” in market share amid daily outflows.

Conversely, BlackRock’s IBIT has emerged as a primary beneficiary, witnessing a substantial increase in market share from 22.1% as of inception to 45.2%.

Record Bitcoin Spot ETFs Outflows And Vulnerabilities

The cryptocurrency market’s inherent volatility was underscored by the net outflow of $326.2 million from US spot Bitcoin ETFs, which more than doubled the previous record of $158.4 million set earlier in the year.

Bitcoin ETF Flow – 19 March 2024

All data in. Record net outflow of $326m pic.twitter.com/iBmBiMR74Z

— BitMEX Research (@BitMEXResearch) March 20, 2024

This outflow, particularly evident in Grayscale’s GBTC, which saw significant withdrawals, points to investor caution amidst fluctuating market conditions.

Grayscale Bitcoin Trust w/ most outflows of *any* ETF since March 2009 stock market low…

Only took 2 months.

via @Todd_Sohn pic.twitter.com/vX6dtcd6sR

— Nate Geraci (@NateGeraci) March 19, 2024

Amid this development, Peter Schiff has critiqued spot Bitcoin ETFs, highlighting a significant drawback: their liquidity is confined to the operational hours of the US market.

Schiff highlighted that this limitation means that in the event of a market downturn outside these hours, investors cannot sell their holdings until the US market resumes trading, leaving them in a “helpless” position to react to overnight market movements.

One problem with owning #Bitcoin in an ETF is that liquidity is limited to U.S. market hours. So if the market crashes overnight, you have no ability to sell until the U.S. market opens for trading in the morning. Very frustrating to watch helplessly with no ability to get out.

— Peter Schiff (@PeterSchiff) March 19, 2024

Featured image from Unsplash, Chart from TradingView

Goldman Sachs Remains Bullish On Bitcoin Despite 18% Price Dip: Key Reasons Why

bitcoinist.com - 周四, 03/21/2024 - 03:30

Retail investors have been the primary driving force in the recent rise of Bitcoin and cryptocurrency prices in general. However, institutional investors are now beginning to enter the market, according to Mathew McDermott, the head of digital assets at Goldman Sachs

Bitcoin Rally Cools Down 

Speaking at the Digital Asset Summit (DAS) conference in London, McDermott noted that while retail investors have been the main drivers of the price action, there is a noticeable shift as institutions increasingly show interest and participation in the cryptocurrency market, reflecting the growing acceptance and recognition of cryptocurrencies as a legitimate asset class.

McDermott highlighted significant changes witnessed this year regarding the types of clients and the trading volumes. The involvement of institutional investors is seen as a significant development for the cryptocurrency market, as it brings additional liquidity, stability, and credibility.

While the exact factors driving Bitcoin’s recent price gains remain uncertain, the launch of US spot Bitcoin exchange-traded funds (ETFs) this year has been identified as a notable catalyst. McDermott described the ETFs as causing a “psychological shift” in the market. 

However, the rally in Bitcoin and other cryptocurrencies has cooled off somewhat in recent days, with BTC plunging more than 18% to $60,900 on Tuesday, coinciding with a broader decline in riskier assets on signs that the Federal Reserve may not cut interest rates as much as previously expected.

Optimism Amidst Crypto Market Challenges

The cryptocurrency market experienced a notable boom during 2020 and 2021, fueled by ultra-low interest rates that encouraged speculative investments. However, this period was followed by a sharp downturn in 2022, with several high-profile crypto-related failures and bankruptcies, including FTX, resulting in significant losses for investors. 

McDermott mentioned that Goldman Sachs has examined bankruptcy claims and explored other investment opportunities in this context.

Regulators have consistently warned about the high risks of Bitcoin and cryptocurrencies, emphasizing their limited real-world utility. McDermott acknowledged that there is currently some leverage in the system, but he expressed that it is not at the same level of “hyperbole” as in previous years.

In addition to their interest in cryptocurrencies, various banks, including Goldman Sachs, have recognized the potential of blockchain technology that underlies these digital assets. They believe blockchain technology could be applied to trade other assets beyond cryptocurrencies. 

Pilot projects exploring tokenizing traditional financial assets, such as bonds, have been initiated. Still, the routine issuance and establishment of a liquid secondary market have yet to be realized.

Ultimately, McDermott expressed optimism about the future, stating that he expects to witness the tokenization of more asset classes and the development of scalable solutions in the next few years. This suggests that adopting and integrating blockchain technology in traditional financial systems may accelerate, providing new opportunities.

Despite the market downturn, as of this writing, bitcoin has climbed back to the $64,000 mark, showing increased volatility in recent days. 

Featured image from Shutterstock, chart from TradingView.com 

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