February 5, 2024|Commentary

What We See in the Markets: Post-Bitcoin ETF Launch


BTC’s spot ETF launch is in the rear-view mirror, and while BTC has had a volatile start to the year (above 50% realized vol, trading in a 25% range), it’s currently trading more or less exactly where it started 2024. The tone of the market right now is generally one of disappointment post-launch; this is primarily due to the elevated level that BTC traded in the days preceding the launch, around 45k-48k. Since January 12, it’s remained below 44k; the narrative is describing the ETF as a sell-the-news event.

Overall, we’ve seen around $1.5b of capital flow into BTC ETFs since their launch. This data is a bit obscured by the trend of capital flowing out of GBTC ($6b so far) and into the new products ($7.5b in total, with $3b into Blackrock, $2.6b into Fidelity, and around $650m each into Ark and Bitwise). The rotation from Grayscale into the new products has led to some frankly insane volume numbers; $4b on the first day, and now flattening out at around $1b per day. Interestingly, the GBTC redemptions have been somewhat predictive of the price of BTC overall. Between Jan 12th and Jan 24th, GBTC saw around $500m of redemptions per day, and BTC was down around 15% during that period. Since then, the size has dropped, with $144m of redemptions on Friday (a low since the approvals), and BTC has rallied 9.5% in this period. It’s a bit challenging to tell if this outflow should matter; if it’s just a rotation into other products, it shouldn’t make a difference. However, of the inflows coming to the new ETF products, it’s hard to tell how much is fresh capital and how much is just GBTC rotation. Probably the best stat to track is the total flow across all products, GBTC as well as the newcomers. During the first four days of the launch, we saw a total of $1.2b of net inflow. However, between Jan 18th and Jan 25th, there was a net outflow of over $500m. Last week saw the numbers switch back into the black, with a total of $800m of net inflow; it’s not surprising that this resulted in BTC’s price recovering. (For more detailed stats, please reach out to a Cumberland RM).

While BTC (and ETH) are both unchanged, alts are underperforming, generally down in the 10-20% range YTD. There does seem to be a strong Beta component to this, where smaller coins are trading worse. ETH is unch, SOL is down 6.5%, AVAX is down 11%, and NEAR is down 25%. This is despite the fact that SOL and AVAX were essentially the best performers at the end of 2024. The fact that larger caps performed best in the rally and also best in the selloff suggests that strictly trading off Betas will be challenging on upticks; the market is looking for more solid headlines, rather than coins to ride the wave of rallies.

One notable outperformer has been LINK, which is the only major in the green, up around 20% on the year. At the start of the year, with the writing of new KPIs, Chainlink’s CCIP is a common feature of project roadmaps, allowing cross-chain transfers across the major EVM chains.

Happy Trading!

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