Landmark volatility

Yearning Bitcoin ETFs flung themselves into the waiting arms of public markets on Thursday. Hearts swooned. The first day's trading volume reached $4.5 billion, suggesting, per The Block, a "healthy uptake."

It was indeed a busy first day on the job for the 11 newly launched spot BTC ETFs. Grayscale's converted flagship trust vehicle, GBTC, saw the heaviest volume ($2.2 billion). Not only was GBTC the first mover in pre-market trading but it already counted $28 billion in legacy assets, helping to grease the skids, so to speak. A spot BTC ETF from BlackRock exceeded $1 billion. Fidelity’s ETF racked up $685 million in trading. ARK 21Shares and Bitwise saw $278 million and $122 million, respectively.

While five ETFs each saw more than $100 million of trading volume, six ETFs failed to hit that bar. Three failed to hit $10 million.

The first day of trading of spot Bitcoin ETFs was accompanied by a huge jolt of volatility for BTC's spot price.

The largest crypto asset's per-coin price shot to the cusp of $49,000 at one haughty juncture yesterday shortly before noon. But some whales started selling – and a big pullback played out over the rest of Thursday into Friday morning. As of 7:49 a.m. (EST), BTC was $45,900, according to CoinGecko.

Meanwhile, Ethereum, touted up by BlackRock CEO Larry Fink as plenty righteous, has notched a seven-day gain of 18.7% versus BTC's 4.5% gain in that same time period. One of the most impressive weekly gainers is Ethereum Name Service (ENS).

It's the 92nd-largest digital asset with a market capitalization of about $780 million. ENS has surged 77% since last Friday. The all-time high for ENS is roughly $83. It was reached at the peak of the market in November of 2021. ENS has shed two-thirds of its value since then.

Impressive first-day trading volume for a ticker-tape parade of new retail crypto products shouldn’t be discounted as some carefully orchestrated splash play by the powers that be; rather, the volume indicates “a considerable influx of investor funds into the spot-based Bitcoin ETFs," said James Butterfill, head of research at CoinShares.

By all metrics – volume, flows, media coverage – the coming out party was a "smashing success,” gushed Bloomberg analyst Eric Balchunas, posting on X.

He tracked some 700,000 individual trades in and out of the 11 spot BTC ETFs yesterday, or twice as much as trades involving shares of Invesco’s QQQ, a popular technology stock ETF.

And it all happened despite limited platform availability. "Just relax and look at this as a multi-year process," Balchunas said.

Some analysts are exploring the question of whether the new, inexpensive funds could cut into crypto exchanges’ trading fee revenue. Or will accelerated mainstream acceptance prove a rising tide lifting lots of other boats?

Peter Smith, CEO of Blockchain.com, heralded the series of launches in a post on X: "Perhaps the most interesting thing is the broad array of firms that have launched a product,” he said, referring to the biggest traditional money manager, BlackRock, coming to market alongside Grayscale and Bitwise, crypto natives, as well as Galaxy/Invesco, a crypto native/tradfi joint venture. "This is how crypto goes forward,” Smith said. “A big, diverse tent."

Announcing their wedding today is CoinShares and Valkyrie Funds which has agreed to be acquired by the former on the heels of the debut of Valkyrie's spot BTC ETF. Additionally, a Valkyrie fund connected with BTC futures also saw surging volume yesterday, as did some other BTC futures ETFs, including funds run by ProShares and VanEck.

All told, in the aggregate, BTC futures ETF volumes hit an all-time high of $2 billion yesterday.

Thursday, Jan. 11, 2024, marked "a watershed moment for the cryptocurrency industry," Reuters said.

However, the industry has miles to go, rivers to cross, before it can rest, as a major question still looms, Reuters pointed out. And that's “whether digital assets, still viewed by many professionals as risky, can gain broader acceptance.”