The VanEck Bitcoin exchange-traded fund (ETF) made headlines recently as it experienced an unexpected surge in daily trading volume, reaching over $258 million in a single day. This marked a 14-fold increase from its previous high of $25.5 million. Despite this achievement, VanEck’s ETF has struggled to keep up with competitors such as BlackRock, Fidelity, and Grayscale, which have consistently led in daily trading volumes since their launch.
Bloomberg’s senior ETF analyst, Eric Balchunas, expressed surprise at VanEck’s exceptional performance, noting that the fund experienced a significant increase in trading activity driven by approximately 32,000 individual trades. This represents a sixty-fold increase from its average trading volume. Balchunas speculated that the surge could be influenced by online communities such as Reddit or TikTok, suggesting retail investors may be behind the spike.
VanEck’s head of ETF Products, Ed Lopez, acknowledged the challenge of pinpointing the exact reasons behind ETF purchases due to their trading on the secondary market. However, he highlighted that the day’s trading displayed robust volume with tight spreads, indicating healthy market activity regardless of investor sentiment. This surge in trading activity comes after VanEck announced a fee reduction from 0.25% to 0.20% effective February 21, which attracted more interest from retail investors.
In addition to VanEck’s ETF, WisdomTree’s Bitcoin Fund (WBTC) also experienced a notable surge in trading volumes, reaching $154 million in daily volume on February 20. This marked an approximately 1,200% increase from the average volume. The fund witnessed 23,000 individual trades on the same day, a significant rise compared to previous activity. Despite VanEck’s ETF being the seventh-largest spot Bitcoin ETF with assets under management totaling $191.9 million, WisdomTree’s fund holds the smallest AUM at $29.4 million according to data from Dune Analytics.
Overall, the unexpected surge in trading volume for VanEck’s Bitcoin ETF and WisdomTree’s Bitcoin Fund indicates a growing interest in cryptocurrency investments among retail investors. The influence of online communities and fee reductions may have played a role in driving the increased trading activity. As the cryptocurrency market continues to evolve, ETFs providing exposure to digital assets will likely play a significant role in shaping investor sentiment and market dynamics.
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