Bitcoin ETFs Cap Off Record-Setting First Month With ~670k BTC Under Management
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What a week it has been for bitcoin. In an otherwise standard bullish week for markets that saw little in the way of new macroeconomic data or developments, bitcoin managed to ride the marketwide risk-on wave and its own ETF inflows all the way to $48,000. Bitcoin now sits at a $927.5 billion market cap, within striking distance of the coveted $1 trillion mark that it lost back in 2022:
Four of the nine new spot bitcoin ETFs made the list of the top 25 largest ETFs by assets after 1 month on the market. ARKB and BITB made the body of the list, while Fidelity's FBTC and Blackrock's IBIT made 2nd and 1st place respectively at over $3 billion each. In all respects, it has been an utterly historic month for ETFs, paved entirely by the underdog asset class that the majority of managers at these firms have called worthless for years now:
Breaking it down by each of the individual players, you can clearly spot IBIT and FBTC in white and blue running the show with the bulk of the daily flows, while GBTC outflows continue to apply consistent downward pressure on the total AUM of all 10 spot bitcoin ETFs:
The 9 new bitcoin ETFs have surpassed Microstrategy to become the 2nd largest non-Satoshi holder of bitcoin in the world, with a total of 203,000 BTC as of Thursday compared to Microstrategy's 190,000 BTC. Adding in GBTC's 467,000 BTC, and the total bitcoin held on behalf of spot BTC ETF owners is 670,000, some $31.644 billion in total assets under management at the current price level:
GBTC has its lowest outflow day yet with $51.8 million leaving the fund on Friday, a drop from the $101.6-million outflow on Thursday. These outflows slowing is a great sign, pointing to a market equilibrium where Grayscale's AUM will level off and the GBTC arbitrage, where fund owners sell for lower-fee vehicles, stops applying consistent downward pressure on bitcoin's price:
With GBTC's selling of its spot BTC holdings finally letting up, bitcoin ETFs accelerating as marketwide risk sentiment rises, and the halving of bitcoin's supply schedule just 2 months away we have entered one of bitcoin's hallmark periods of up-only euphoria. Not to jinx it or anything, but it would behoove you to take a look around, bask in all of it, and enjoy it while it's here. We haven't had one of these in quite some time, and it's a fool's errand to guess how long risk-taking will stick around, given that liquidity in financial markets is currently slated for a massive reduction beginning towards the end of Q1.
Bitcoin's growth this year was 6x the S&P 500, 3x the Nasdaq, and 2x the magnificent 7 stocks that carry the major US equity indices. The window of informational arbitrage is narrowing, and the market is slowly discounting these assets correctly. The snake oil and pet rock narratives are falling to the wayside as the Sharpe ratio of portfolios the world over is radically improved by bitcoin's simple inclusion, warranting a second look from formerly dismissive asset managers. Its persistent recovery despite devastating drawdowns proves this. Where those narratives once sat, the reality of the apex risk-off asset is creeping its way into the investing zeitgeist. Don't be the last one to figure it out.
Not to mention that bitcoin still has plenty of room to run, historically speaking. Relative to its realized price, the average price at which all of the network's bitcoin last moved on-chain, bitcoin is trading at a multiple of 1.36—in cycles past, this multiple has risen as high as 7 before bitcoin's cycle top arrives. Of course, this rests on whether or not the current risk-on impulse in markets will last:
Bitcoin miners are up as much as 602.64% since the start of 2023. Allocating to miners is the market's preferred low-risk method of gaining additional beta on top of bitcoin, one that asset managers will continue warming up to as bitcoin matures in the eyes of the professional investing world. Where else are you going to find these kinds of returns in a US equity not named NVIDIA? You'd be hard-pressed.
Day by day, bitcoin is consuming the incumbent class. Where modern monetary theory posits that interest rates must be dictated by a central authority, bitcoin functions perfectly with monetary policy that can't be changed. Where traditional investing advises a 60/40 portfolio, the total return of US Treasuries since 2021 has completely obliterated many who followed this once tried and true portfolio structure. Now that Wall Street is at the table, you can bet that this slow realization of bitcoin's true properties is going to accelerate, narrowing the window that you have to park and maximally preserve your wealth with it. Don't wait.
Hope you all have an excellent weekend,
Joe Consorti
Theya is an app for simplified Bitcoin self-custody. With its 2-of-3 multisig custody solution, you can enjoy maximum security for your Bitcoin and the peace of mind that comes with it.
Download Theya on the App Store and declare your sovereignty today.