The recent surge in Bitcoin‘s price to over $54,900 has kept the market abuzz, with a particular focus on the activities surrounding new spot Bitcoin Exchange Traded Funds (ETFs). A New York Digital Investment Group (NYDIG) report challenges the typical interpretation of high trading volumes, which often suggests significant investor interest in these financial products.
NYDIG Research Head Questions Common Assumptions
Greg Cipolaro, NYDIG’s Global Head of Research, expressed in a recent article that daily trading volumes may not reflect actual fund inflows, thus debunking a widespread belief in the investment community. Contrary to what some might think, Cipolaro advocates for the Grayscale Bitcoin Trust (GBTC), ranking it as a top investment choice among Bitcoin ETFs despite the nuanced nature of trading volume indicators.
Since the initiation of spot ETFs on January 11, GBTC has seen impressive daily trade volumes that total over $20 billion. Nevertheless, Grayscale’s funds have experienced a substantial $7 billion drop in assets under management (AUM), highlighting the weak link between trading volumes and actual capital inflow.
Dissecting the Performance and Turnover Rates
Comparatively, BlackRock’s iShares Bitcoin Trust (IBIT) has amassed about $13 billion in trades—just over half of GBTC’s performance—and yet has witnessed its AUM grow from nothing to roughly $7 billion. Cipolaro emphasizes the importance of evaluating a fund’s turnover rate, which is calculated by dividing dollar-denominated trading volume by the fund’s net asset value.
This metric offers insights into the behavior of investors and traders, potentially shedding light on their motivations. Across all spot Bitcoin ETFs, the aggregate turnover rate stands at 5.3%, with Valkyrie (BRRR) and GBTC at the lower end, each with rates around 2.2% and 2.4%. Ark 21 (ARKB) leads the pack with an 11.3% turnover rate, while WisdomTree (BTCW), the smallest by AUM at approximately $30 million, astonishingly hit a 205% turnover rate over five days.