Bitcoin rose not only thanks to ETFs

In June, the price of Bitcoin soared, registering new 2023 annual highs at nearly $31,500. While the main boost appears to have come from ETF, there were actually other triggers or favoring factors as well. 

That’s what emerges from CCData’s latest Digital Asset Management Review, released yesterday. 

ETF on Bitcoin

Despite the fact that there have been ETFs on Bitcoin for some time, two pieces of news in this regard have moved the price of BTC upward. 

The first is the SEC’s approval of the first leveraged ETF on Bitcoin in the US. This is an ETF based on futures contracts on the price of BTC, but with a target return of 2x. 

To date, the SEC has already approved several Bitcoin futures-based ETFs for the US market, but until now it has not approved any leveraged ones. 

It has also not yet approved any on spot Bitcoin, that is, collateralized directly in BTC. 

In this regard, news of BlackRock’s attempt to get one approved has caused a stir, since dozens of attempts to do so have failed to date. 

However, BlackRock has a very high approval rate of over 99%, so much so that on the very day of the announcement the price of BTC rose from $25,000 and $26,000. 

While these two pieces of news were probably the two main ones that provided support or triggered the rebound in Bitcoin’s price in recent weeks, they were not the only ones that influenced the crypto markets. 

The other news

Indeed, CCData’s report reveals that the month of June was marked by several significant developments in digital asset investment products. 

For example, the launch of EDX Markets was announced by traditional finance giants such as Fidelity, Charles Schwab, and Citadel. 

This is a platform developed by major financial services companies, which has begun providing spot trading services for Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. 

The report reveals that it especially benefited Bitcoin Cash, which soared in value after being listed and traded on the platform. It even gained 116% in less than ten days, although it remains at -94% from its 2017 highs. 

In addition, total AUM for digital asset products increased 9.05% to $33.4 billion. Aggregate average daily volumes for digital asset products also rebounded, increasing by 6.77%.

To date, the increase in total assets under management for digital asset investment products has accumulated +69.5%, with those dedicated to Bitcoin alone growing 12.4 % in June. 

It is worth noting that in April and May these metrics were down. 

Even Grayscale’s Bitcoin Trust (GBTC) saw its trading volumes increase 78.9% in June, thanks in part to news regarding ETFs. 

Now Bitcoin-based investment products have a 73.1% market share in the digital asset sector, up 3.0% from May. Those on Ethereum stop at 23.1%, also down from 24.5% in May.

The report’s conclusions

In light of all this, CCData’s report states that Bitcoin has proven to be a viable asset class with which investors can diversify their portfolios. 

It has attracted considerable attention from mainstream investors in recent years, particularly because of the circulating supply that cannot be manipulated by any central government, and thus can help in the event of a major monetary expansion. 

In addition, overall regulatory frameworks for exchanges and cryptocurrencies are becoming clearer, despite what is not happening in the US in this respect. 

However, digital asset markets still have a long way to go for more risk-averse investors to feel comfortable trading within them. 

What’s more, it is likely that any institutional investors who want to gain exposure to these assets will prefer cryptocurrency investment products such as ETNs and ETFs, which make cryptocurrencies more accessible to investors because they can be traded on traditional exchanges without the complexities of safe custody. 

So the picture that emerges is basically positive, although still far from optimal.