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Bitcoin ETFs Trigger $4.6B in Volume on First Day of Trading

Trading volumes could hit $50 billion to $100 billion this year following the SEC's historic Bitcoin ETF approval

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Although Bitcoin has struggled to stay above $46,000 since the SEC's approval, trading volume suggests Bitcoin ETFs are living up to the hype.

According to data from LSEG, Bitcoin ETFs attracted $4.6 billion on its first day of trading.

Eleven Bitcoin ETFs from the likes of began trading on Thursday morning, following the SEC's historic approval on Wednesday. Grayscale, BlackRock, and Fidelity dominated trading volumes.

"Trading volumes have been relatively strong for new ETF products," said Todd Rosenbluth, strategist at VettaFi. "But this is a longer race than just a single day's trading."

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Competition has already heated up. Bitwise Bitcoin ETF, ARK 21Shares Bitcoin ETF, and Invesco Galaxy ETF have fees of just 0%.

BlackRock, the OG Bitcoin ETF applicant, has a fee of just 0.20% on the first $5 billion and 0.30% thereafter for its iShares Bitcoin Trust. WisdomTree placed a 0.5% fee on its trust whilst VanEck imposed a 0.25%.

Grayscale also received approval to transform its current Bitcoin trust into an ETF on Thursday, establishing the world's biggest Bitcoin ETF with AUM exceeding $28 billion.

Bernstein analysts believe Bitcoin ETF flows could grow to $10 billion in 2024, whilst Standard Chartered believes the figure could be as large as $50 billion to $100 billion.

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"Despite the interest in the crypto market, investors won't allocate a significant share of their portfolio in cryptos,” said Ruslan Lienkha, chief of markets at YouHodler. "Even a small percentage of a portfolio specifically of institutional investors can boost crypto market capitalization."

Coinbase Chief Legal Officer, Paul Grewal, explained that these products bring in new demographics to the market.

“Spot crypto ETFs are poised to transform the crypto landscape by broadening the reach of the asset class to new investor demographics through convenient and highly regulated products,” he said.

However, the SEC's approval has failed to win over other regulators such as South Korea. An official from South Korea’s Financial Services Commission (FSC) told local media that the SEC's approval has not prompted the country's regulator to reconsider its stance.

“The SEC also reluctantly allowed virtual asset ETFs on a limited basis in response to the court decision,” the official said.

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The FSC expressed concerns including unauthorized fund outflows, money laundering, and potential speculative losses. These concerns were pivotal in their decision to maintain the ban, first imposed in December 2017, which prohibits financial institutions from investing in cryptocurrencies.