BlackRock and Fidelity’s Bitcoin ETFs break into top 10 with $4.8b January inflow

BlackRock and Fidelity’s spot Bitcoin ETFs have entered the top 10 ETFs with the highest inflows in January, amassing around $4.8 billion.

The iShares Bitcoin Trust by BlackRock secured eighth place with an impressive $2.6 billion in net flows, closely followed by the Fidelity Wise Origin Bitcoin ETF, which captured tenth place with $2.2 billion, according to a Feb. 3 report from Morningstar research analyst Lan Anh Tran.

This influx contrasts sharply with the Grayscale Bitcoin Trust, which experienced the second-highest outflows among ETFs, losing an estimated $5.7 billion.

Nate Geraci, president of the investment advisory firm ETF Store, expressed his astonishment at these developments on X, highlighting the intense competition between BlackRock and Fidelity’s offerings.

Geraci also noted the emergence of a “strong middle class” among Bitcoin funds, led by ARK Invest and 21 Shares, along with Bitwise, which are quickly approaching the $1 billion mark in assets under management.

The landscape for U.S. spot Bitcoin ETFs has been dynamic, with six consecutive days of net positive inflows totaling nearly $715 million, predominantly into BlackRock and Fidelity’s funds. This period of gains followed a series of outflows, especially from Grayscale’s fund, which saw a significant decrease in outflows over the same week.

This dynamic is further complicated by the substantial holdings of BlackRock and Fidelity, which now represent about 0.5% of the total Bitcoin supply, signaling a significant endorsement of cryptocurrency from traditional financial sectors. In contrast, MicroStrategy, the largest private holder of Bitcoin, and Grayscale, with its vast holdings, highlight the diverse approaches to Bitcoin investment, ranging from corporate acquisition strategies to investment funds.

This shift in investor preference is challenging for Grayscale, the pioneering crypto native digital asset manager, which is facing substantial outflows as its 1.5% ETF fee has come under scrutiny, especially as it remains the highest among spot Bitcoin ETF issuers.

Grayscale CEO Michael Sonnenshein defended the fee, emphasizing the trust’s position as the largest, most liquid, and oldest spot Bitcoin ETF on the market. In contrast, newer entrants have set lower fees to attract investors, intensifying the competition.

Invesco and Galaxy Digital made an early play to entice fresh interest last week, dropping their management fee to 0.25% from 0.39% on Jan. 30.