BlackRock and Fidelity lead billion-dollar spot Bitcoin ETF race

The SEC approved a handful of spot Bitcoin ETFs, but funds from two particular issuers are heads and shoulders above the lot while Grayscale’s GBTC bleeds outflows.

Inflows of $1.9 billion and $1.6 billion confirmed spot Bitcoin (BTC) ETFs from BlackRock and Fidelity, respectively. They are the dominant issuers from a basket of 10 asset managers approved to list products by the U.S. Securities and Exchange Commission (SEC).

Crypto native firm Bitwise and Cathie Wood-backed ARK 21Shares followed leagues behind the two frontrunners; both recorded inflows of over $500 million. 

Bloomberg data on Jan. 24 shows that Fidelity’s Wise Origin Bitcoin Fund (FBTC) and the BlackRock iShares Bitcoin Trust (IBIT) made up 70% of all inflows into spot BTC exchange-traded products.

The ETFs from BlackRock and Fidelity are also two of the fastest ever to achieve $1 billion in assets under management (AUM), likely due to their Wall Street presence as some of the largest financial firms in the world. 

Meanwhile, nearly $4 billion exited Grayscale’s Bitcoin Trust (GBTC) less than two weeks after the SEC tendered approval. Grayscale’s product is still the largest spot BTC ETF on the market, holding over $20 billion in market capitalization and more than 500,000 Bitcoins in Coinbase custody. 

Since Jan. 11, when spot ETFs began trading, Grayscale has sent around 93,700 BTC worth roughly $3.9 billion to Coinbase Prime wallets, according to blockchain analytics provider LookOnChain.

The massive outflows seem to have induced sell pressure on BTC, as tokens are liquidated to match redemption demand. 

Grayscale’s 1.5% ETF fee, the highest of any issuer, attracted skepticism and scrutiny. It’s the highest fee any issuer charges for these spot BTC ETFs, but Grayscale CEO Michael Sonnenshein backed his firm’s decision to reduce the previous 2% cost slightly.

Sonnenshein said his company’s ETF is the largest, most liquid, and oldest spot BTC ETF on the market. The executive added that other issuers, being new to the scene, posted fees as low as 0.21 to capture investors in a highly competitive marketplace.