Digital reading bitcoin ETF: 5 futures ETFs have total assets of nearly $1.3 billion, how much is Bitcoin affected by the news of the application?

By Carol, PANews

BlockRock, the world’s largest asset manager, filed an application for a Bitcoin spot ETF with the SEC on June 15, although the SEC will respond to the review as early as September 2 (related reading: PA Illustration | A quick look at the key timelines for the review of Bitcoin spot ETF applications), but given BlackRock’s global position in the asset management industry, this news is still considered an important signal that Bitcoin and other cryptocurrencies will likely be adopted by more institutions. In addition, well-known institutions that have also recently submitted Bitcoin spot ETF applications to the SEC include Fidelity, WisdomTree, VanEck, Invesco Galaxy, etc. As more and more institutions show their willingness to enter the market, the market is confident that more compliant crypto investment products will be ushered in.

To this end, PAData, the data journalism column of PANews, analyzed the trading of Bitcoin spot ETFs, futures ETFs and trust funds that have been listed, and found that:

1. BTCC. The total holdings of the three funds, U, BTCE and GBTC, are about 675,600 BTC (equivalent to $20.27 billion). The total growth since June is 9292 BTC, and the overall growth trend is good.
2. THE TOTAL ASSETS UNDER MANAGEMENT OF THE FIVE MAJOR BITCOIN FUTURES ETFS, BITO, XBTF, BTF, BITS AND DEFI, HAVE REACHED $1.295 BILLION. BITO is the only futures ETF that is fully allocated to CME futures contracts, and other futures ETFs also have a percentage of other assets, such as U.S. Treasuries.
3. The highest yield in the last month is BITS, which reached 33.20%, and the others are only about 12%. Since the beginning of this year, the highest yield is still BITS, reaching 137.65%, and the others are around 74%. Earnings outperformed spot ETFs and trust funds.
4. Within a week after the announcement of BlackRock’s application for a Bitcoin spot ETF, the spot price of Bitcoin rose by an average of 2.78% per day, which was the largest average daily increase brought by the news within the statistical range. Previously, the average daily increase brought by the news was also higher in the month of VanEck futures ETF application, which rose by an average of 1.56% per day.
5. The impact of the news of institutional ETF application and listing on the spot price of Bitcoin may come from three aspects, one is the reputation endorsement of the institution itself, the second is the type of ETF applied, the application news of the spot ETF brings a greater increase, and the third is the price trend of Bitcoin when the news occurs, if the application and listing news occur in the upward trend of Bitcoin, then it can usually bring a certain amount of price increase, and if it occurs in a downward trend, then these news usually cannot reverse the market.

Bitcoin spot ETF holdings increased by 5,640 BTC, and the over-the-counter premium rate of grayscale GBTC rebounded

Canadian investment management company Purpose Investment launched the world’s first Bitcoin spot ETF in February 2021, and the current official website shows that the ETF includes 4 trading products, namely BTCC (purchased with Canadian dollars and hedged against US dollar risk), BTCC. B (purchased in Canadian dollars, not hedged against USD risk), BTCC. U (purchased in USD, allowing investors to hold Bitcoin in USD), BTCC. J (carbon neutral), investors can buy these ETFs on the Toronto Stock Exchange, and their shares correspond to physically settled bitcoins, making them a user-friendly, low-risk method of cryptocurrency trading that is not available to regular users in the United States. Another product that is somewhat similar to spot ETFs is closed-end trusts, which also correspond to physical bitcoins, such as GBTC, which is issued by GrayScale in the United States and purchased by accredited investors. and BTCE issued by the German ETC Group, which is currently available on two exchanges, Deutsche Börse XETRA (a trading venue operated by the Frankfurt Stock Exchange) and SIX Swiss Stock Exchange (Swiss Stock Exchange).

Since multiple data service websites only provide BTCC.U holdings, only the BTCC.U in the Purpose spot ETF is not fully counted here. Looking at the amount of bitcoin held by BTC.U, BCE, and GBTC, as of July 18, the total holdings of the three funds were about 675,600 BTC. Based on the recent price of $30,000 in bitcoin, it is equivalent to $20.27 billion. Among them, GBTC is the largest, with a holding of 625,200 BTC, and the holdings of BTCC.U and BTCE are both around 200,000 BTC. From the perspective of changes in holdings, since June, the holdings of the three funds have increased by a total of 9292 BTC, and the overall growth trend is good, of which only GBTC’s holdings have decreased slightly by 0.25%, while the holdings of BTCC.U and BTCE have increased by 24.83% and 31.07% respectively.

However, trusts do not have a redemption plan and are similar to “paper gold”, so the price tends to have a significant price difference from its net asset value, but spot ETFs allow market makers to make markets, and if there is sufficient liquidity, the price will usually not be at a premium or discount. This difference is fully reflected in the return performance of the three funds.

As of July 18, the average yield of BTCC.U this month is about 6.76%, and the average monthly yield this year is about 8.84%, which is significantly better than BTCE and GBTC. The average returns of the latter two this month are -5.27% and -26.39%, respectively, and the average monthly returns this year are -5.85% and -38.18% respectively, both of which are in a loss-making state, but the losses are shrinking.

While BTCC.U’s earnings performance is better, its trading volume is not the highest. As of July 18, the average daily trading volume of BTCC.U this month was only 99,500 shares, and the average daily trading volume of BTCC this month was about 221,700 shares, with a total of 321,200 shares, which was higher than the average of 154,000 BTCE shares in the same period, but lower than the average of 3,926,000 shares of GBTC in the same period.

However, it is worth noting that with the announcement of more institutions’ applications in June and the steady recovery of BTC prices, the average daily trading volume of these four funds in June increased month-on-month, of which BTCC.U increased by 74.89% month-on-month, BTCC increased by 47.27% month-on-month, BTCE increased by 23.66% month-on-month, and GBTC increased by 112.67% month-on-month. So far this month, the average daily trading volume of BTC.U, BTC, and GBTC has maintained its growth momentum.

The total assets of the top 5 bitcoin futures ETFs are nearly $1.3 billion, and the returns have exceeded 70% since the beginning of this year

Although there are no Bitcoin spot ETFs listed in the United States, there are already some futures ETFs listed in the United States. AS OF JULY 18, THE TOTAL ASSETS UNDER MANAGEMENT OF THE FIVE MAJOR BITCOIN FUTURES ETFS, BITO, XBTF, BTF, BITS, AND DEFI, HAVE REACHED $1.295 BILLION. Among them, BITO, officially issued by ProShares in October 2021, is the largest futures ETF in the statistical scope, with total assets of $1.199 billion. Secondly, XBTF and BTF, issued by VanEck and Valkyrie, are also relatively large, with total assets of more than $30 million and $40 million, respectively.

These bitcoin futures ETFs typically track Bitcoin futures contracts on the Chicago Mercantile Exchange (CME). Among them, the largest BITO is the only futures ETF that is fully allocated to CME futures contracts and implements a “rolling” futures contract strategy. IN ADDITION, OTHER FUTURES ETFS ARE ALLOCATED A CERTAIN PROPORTION OF OTHER ASSETS ON THE BASIS OF CME FUTURES CONTRACTS, SUCH AS XBTF AND BTF ARE ALLOCATED TO U.S. TREASURY BONDS, BITS IS ALLOCATED TO BLOCKCHAIN ETFS ISSUED BY OTHER INSTITUTIONS, AND DEFI IS ALLOCATED TO CASH.

Judging from the recent net capital flow, BITO also has the largest net inflow. In the latest month, BITO saw a net inflow of $259 million. Secondly, BTF and BITS also had a small net inflow of funds in the latest month, about $1.35 million and $790,000, respectively. If the time period is extended to this year, then the 5 bitcoin futures ETFs within the observation range have net inflows, and the highest net inflow is still BITO, about $333 million. Secondly, XBTF has a net inflow of $6.58 million this year, and other ETFs have relatively small net inflows this year.

BITO is also the one with the highest average daily trading volume among the five bitcoin futures ETFs, with about 9,969,100 shares, exceeding the average daily trading volume of GBTC this month by 153.93%. However, the trading volume of other futures ETFs is not high, with about 383,800 BTFs, 17,800 XBTFs, and the remaining two are less than 10,000 shares.

Overall, BITO is far ahead of other Bitcoin futures ETFs in terms of fund size, fund inflow, and average daily trading volume, but in terms of returns, BITO is not ahead.

According to statistics, the highest yield in the last month is BITS, reaching 33.20%, while the returns of other ETFs in the observation range are only about 12%. Even if the time period is extended to this year, the highest yield is still BITS, reaching 137.65%, while the other ETFs in the observation range have yields of around 74%.

It is reasonable to guess that the yield of a futures ETF has a lot to do with the asset exposure it allocates, and the highest-yielding BITS allocates another blockchain ETF in addition to the bitcoin futures contract, which points to a broader range of crypto assets, not just bitcoin, which may bring higher returns to BITS. But overall, Bitcoin futures ETFs have performed much better than spot ETFs and trust funds.

ETF news has had a mixed impact on the price of BTC, and the recent price increase of BTC may also be related to on-chain fundamentals

There is no doubt that institutional entry can bring abundant money to the crypto market, so news about institutional applications and ETF issuances can always drive changes in the spot price of Bitcoin. Although the impact of the news surface is not the only reason, it is at least one of the reasons, so how big is this impact?

PAData counts the changes in the spot price of Bitcoin within a certain time frame after the application and listing news of some ETFs according to the information reported in the public report, if the public information can get a specific date after cross-validation, the price change within a week after the date of the news can be counted, usually the listing news about the futures ETF can be specific to the date, if the public information can only get the specific month after cross-verification, the price change of the month of the statistical news is counted, and there is usually a certain ambiguity about the time of the ETF application。 In order to compare on the same scale as much as possible, PAData calculates the average daily change in the price of Bitcoin over a certain time frame, averaging 7 days in a week and 30 days in the month.

According to statistics, within a week after the announcement of BlackRock’s application for a bitcoin spot ETF, the spot price of bitcoin rose by 19.49%, equivalent to an average daily increase of 2.78%, which is the largest average daily increase brought by the news within the statistical range. It can be seen that the market is looking forward to the entry of institutional leaders.

Second, during GBTC’s period of rapid growth (October to December 2020), the spot price of Bitcoin increased by 168.21%, which is equivalent to an average daily increase of 1.87%, but the spot price of Bitcoin only increased by 0.42% per day in the week immediately after GBTC was listed.

Other higher daily increases brought by the news are the VanEck futures ETF application month, where the spot price of Bitcoin rose by 1.56% per day; In the month that the Jacobi spot ETF was approved, the spot price of Bitcoin rose by an average of 1.33% per day; In the month when the Fidelity/Wise Origin and SkyBridge Capital spot ETFs were applied, the spot price of Bitcoin increased by an average of 1% per day. In addition, there are some news that did not drive the price of bitcoin up, such as the recent news of Valkyrie’s spot ETF application, the spot price of bitcoin fell by 1.15% on the day the news of the Valkyrie spot ETF application was reported.

In general, the impact of the news of institutional ETF application and listing on the spot price of Bitcoin may come from three aspects, one is the reputation endorsement of the institution itself, such as BlckRock, which can stimulate the confidence of the market; PAData takes the Bitcoin price at the time of the news as the midpoint, and expands it for half a year before and after to observe the Bitcoin price trend at that time, and under this rough observation, it can still be found that if the application and listing news occurs in the Bitcoin uptrend, then it can usually bring a certain amount of price increase, and if it occurs in a downtrend, then these news usually cannot reverse the market.

Therefore, it is difficult to attribute the recent rise in the price of Bitcoin to one factor, and in addition to the positive news from BlckRock, it should be noted that the number of transactions on the Bitcoin chain has also reached an all-time high due to the rise of the BRC-20 token. On July 18, the number of transactions on the Bitcoin chain reached 582,500, an increase of 210.83% from 187,400 at the beginning of the year. Judging from the trend, after May, the number of on-chain transactions is more than 400,000 most of the time, and more than 500,000 is not uncommon. The number of on-chain transactions is a direct reflection of the adoption of Bitcoin, and generally speaking, an increase in the number of on-chain transactions means that the fundamentals of the transaction have improved, and the price is likely to rise.

The impact of the news is complex, and whether it is spot or futures, how much money and confidence a Bitcoin ETF can bring to the market depends on many factors. However, the application and approval of ETFs are inseparable from the development of the entire market, and the two should be complementary and interrelated systems. The analysis of this article only hopes to provide a review of the issued Bitcoin ETFs and make observations on the impact of the news to provide a basis for future analysis, on the basis of which PAData will continue to monitor the trading of Bitcoin ETFs.