Bitcoin Becomes Second Largest ETF Commodity a Week After Approval

Two weeks after approval of Bitcoin ETFs in the U.S, Bitcoin has grown to become the second largest commodity ETF in the U.S. The top digital asset beat silver to claim this position in terms of assets under management. 

The U.S securities and exchange commission (SEC) had last week approved 11 Bitcoin ETFs for the first time since the industry started in 2009. A little over a week after since then, the approved Bitcoin ETFs now hold approximately 647,651 bitcoin, which amounts to $27.5 billion in AUM, according to CC15Capital.

Commenting on the feat, Bitfinex Head of Derivatives Jag Kooner, said that pent-up demand for bitcoin has played a crucial role in propelling the digital asset ahead of silver in AUM terms.

“Bitcoin ETFs have exceeded silver ETFs in the U.S. in terms of size, driven by the substantial market interest they have received,” he said.

Out of the total number of Bitcoin held by the ETFs, Grayscale Grayscale Bitcoin Trust ETF (GBTC) currently holds around 619,000 bitcoin, Coinglass data shows. This makes it the single largest Bitcoin ETF at the moment.

“Grayscale’s conversion of its existing bitcoin trust into an ETF created the world’s largest bitcoin ETF overnight,” Kooner said. “The level of trading reflects the pent-up demand for these products, and we expect that it will lead to increased liquidity and stability in the market,” the analyst added.

Strong Interest in BTC

Long before any Bitcoin ETF was approved, there was a lot of skepticism around the asset and the crypto industry in general. As analysts rightly predicted, the skepticism wasn’t due to a lack of interest in Bitcoin but to fear.

It was predicted that a Bitcoin ETF would bring more confidence to mainstream investors and allow them to step into the Bitcoin pool. The rapid growth of the Bitcoin ETFs currently attests to that fact. 

As at Thursday 18 January which is the fifth day of trading, for the new assets, the cumulative trading volume for the 11 funds exceeded $12 billion, according to Yahoo Finance data compiled by The Block.

According to Kooner, this strong interest is expected to continue into the future.

“The ETF issuers have implemented competitive fee structures, featuring a range of discounted fees and fee waivers which should attract more investors and could lead to further competitive pricing among ETF providers,” he said.

“While some in the investment community still view cryptocurrencies as risky, the growth of these ETFs could pave the way for more innovative crypto ETFs and new underlying assets such as ether,” he added.

What about an Ethereum ETF?

As Bitcoin received approval to be traded as a commodity ETF, Ethereum supporters have started making moves towards getting an Ethereum ETF as well. However, according to analysts from JP Morgan and TD Cowen, an Ethereum ETF may not receive an approval any time soon.

The question however, is will an Ethereum ETF have the same level of success as Bitcoin if it eventually secures approval? 

The analysts believe that the SEC must first of all clear the second largest asset as a commodity, which is quite unlikely since the SEC has repeatedly said that Bitcoin is the only crypto asset that qualifies as a commodity, unless the agency changes its mind.

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