Asset manager Blackrock has established itself as the frontrunner in the Bitcoin ETF race in terms of inflows with its IBIT ETF, which is increasingly attracting institutional attention as a key development demonstrating its success.
Many fund managers have come together to invest in BlackRock’s ETF, signaling growing interest in digital assets among investors. traditional financial institutions.
Bloomberg ETF expert Eric Balchunas provides insight into emerging trends, highlighting the current state of property and the potential for future growth.
BlackRock’s IBIT ETF gains traction with 30 fund managers
According to According to Eric Balchunas, around thirty fund managers, mainly funds and consultants, have already invested in IBIT. While this currently represents only 0.2% of shares outstanding, Balchunas believes this is just the “tip of the iceberg,” indicating the potential for broader adoption and ownership. increased.
Balchunas’ analysis further reveals an intriguing trend in the form of “nibbling” among investors. The low percentage of wallet numbers associated with the holdings of the IBIT ETF indicates cautious but persistent interest from institutional investors.
This suggests a gradual accumulation of stocks as fund managers cautiously embrace Bitcoin exposure via BlackRock’s offer.
While BlackRock currently leads the Bitcoin ETF race, Fidelity’s FBTC ETF appears in second place. Balchunas reports that Fidelity’s offering attracted 11 investors, representing a comparable 0.2% of shares outstanding.
Bitcoin ETF Market Makers and Flows
Since Friday, most Bitcoin ETFs in the US market have seen no inflows, which has recently attracted the attention of ETF experts who are shedding light on the intricacies of ETF inflows. James Seyffart, an ETF expert, provides insight into the flow dynamics within the Bitcoin ETF landscape.
With nearly 3,500 ETFs in the United States, Seyffart underlines the normality of ETFs not experiencing any flow on a given day. It also delves deeper into the concept of units of creation. It explains the conditions under which shares are created or redeemed, highlighting the importance of supply and demand dynamics in driving ETF flows.
Seyffart explains the concept of creation units, blocks of shares in which ETF shares are created and redeemed. Each ETF can have a different size creation unit, and in the case of spot Bitcoin ETFs, creation units range from 5,000 to 50,000 shares.
It specifies that shares are created or repurchased when there is a significant mismatch between supply and demand that exceeds the threshold of one creation unit. This inadequacy must also justify access to underlying market and be greater than the size of a creation unit.
In the ETF market, market makers play a crucial role in facilitating trades and managing flows. Seyffart explains that market makers trade stocks like stocks when minor asymmetries between supply and demand occur.
However, Seyffart notes that for market makers to engage with Authorized Participants (APs) and the underlying market, a one-sided lag greater than one creation unit in either direction is required. This ensures that the cost of creating or repurchasing shares is lower than hedging and making markets through traditional methods.
It is worth noting that on Monday, BlackRock was the only fund to see inflows since Friday. Specifically, the IBIT Bitcoin ETF saw net inflows of $73.4 million on April 15, down from $111.1 million on Friday.
In contrast, the other eight ETFs, excluding Grayscale’s GBTCreported zero flow over the past two days, according to SoSo Value data.
Currently, BTC is trading at $61,800, down more than 4% in the last 24 hours and 10% in the last seven days.
Featured image from Shutterstock, chart from TradingView.com