Bitcoin ETFs break ‘all time volume record’ as IBIT dominates

• BlackRock’s Bitcoin ETF volume surpassed its own record by more than 30%.
• NYDIG stated high volume doesn’t imply strong investor interest.

Spot Bitcoin ETFs have seen explosive growth of late. On the 26th of February, the combined daily trading volume for the nine new ETFs reached a staggering $2.4 billion.

This milestone was shared by Eric Balchunas, a senior ETF analyst at Bloomberg, on X (formerly Twitter). He said,

“It’s official..the New Nine Bitcoin ETFs have broken all time volume record today with $2.4b, just barely beating Day One but about double their recent daily average.” 

Bitcoin ETF market heats up

The impressive figure excluded the Grayscale Bitcoin Trust [GBTC], which boasts the largest pool of assets under management (AUM) within the category.

However, when taking GBTC into account, fellow Bloomberg analyst James Seyffart revealed, 

“The entire Bitcoin ETF category had its second most traded day ever at $3.2 billion. The only day larger was the launch day when they traded $4.6 billion.” 

Balchunas admitted uncertainty regarding the source of this renewed or continued interest in Bitcoin [BTC] ETFs but observed that trading volumes tend to increase on the first trading day of the week.

 The cumulative trading volume for all spot Bitcoin ETFs has surpassed $52 billion since their launch in mid-January, according to data from CoinShares. 

BlackRock Bitcoin ETF records all-time high

BlackRock’s iShares Bitcoin trust [IBIT] emerged as the leader, raking in a staggering $1.29 billion. IBIT boasted $6.6 billion in AUM at press time.

Fidelity [FBTC] followed closely behind with a daily volume of $576 million, while the ARK 21Shares [ARKB] and Bitwise [BITB] ETFs saw inflows of $276 million and $81 million, respectively.

Earlier in the day, IBIT’s marked a milestone of trading $1 billion worth of assets so far. This achievement not only ranked it 11th among all ETFs, placing it in the top 0.3% but also among the top 25 in stocks.

Why is IBIT soaring?

While explaining IBIT’s remarkable success, Balchunas remarked,

“BlackRock is Godzilla-big with massive distribution, a trusted brand, and they are well known in the trading world (dozens of their ETFs do over $200m/day) so not surprising they breaking away in volume.”

He explained that while trading volume does not directly equate to fund inflows, it is nonetheless critical over the long term. Moreover, high liquidity reduces transaction costs and friction while enhancing anonymity.

This level of trading volume, according to Balchunas, qualifies as “big boy level volume,” sufficient to draw the attention of large institutional investors, especially considering that it competes with ten other funds. 

High volume doesn’t equal new money

Amidst these developments, NYDIG warned that high volume is not a direct sign of investor interest. Greg Cipolaro, NYDIG’s global head of research, stated,

“Daily trading volume is not a reliable indicator of daily fund flows, a misconception prevalent in the industry.”

Instead, he advocated for evaluating a fund’s turnover ratio—the quotient of its dollar trading volume to its net asset value— as a more reliable metric. 

Cipolaro noted that the overall turnover ratio for spot Bitcoin ETFs was 5.3%. The lowest rates were observed in Valkyrie [BRRR] and Grayscale’s GBTC, at 2.2% and 2.4%, respectively.