Spot-Bitcoin ETFs Boost US Trading to Record Levels

Spot-Bitcoin ETFs Boost US Trading to Record Levels

Bitcoin ETFBitcoin

By Jakub Lazurek

22 May 2024 (27 days ago)

3 min read

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The launch of spot-Bitcoin ETFs in January has driven Bitcoin trading during US market hours to unprecedented levels, accounting for 46% of this year's volume.

Bitcoin trading during US market hours has surged, accounting for 46% of this year's total volume from January to April. This significant rise is linked to the launch of spot-Bitcoin exchange-traded funds (ETFs) in January, which have attracted nearly $13 billion in net inflows.

The introduction of spot-Bitcoin ETFs has greatly increased trading activity. During US market hours, Bitcoin trading now represents almost half of the year's volume. The ETFs, launched in January, have driven this surge by attracting substantial investment.

The US leads Bitcoin trading. Research by Kaiko shows that Bitcoin trading volume peaks at the start and end of US trading hours. This pattern matches the calculation of net asset values for ETFs at the close of US stock exchanges each weekday. Thursdays see the highest trading volume during US hours, making up nearly 15% of the daily volume.

In contrast, Bitcoin trading during Asian market hours is much lower, highlighting the growing influence of US markets on Bitcoin trading. Toby Winterflood, Chief Product Officer of CCData, noted that Bitcoin's performance during US hours shows reduced volatility compared to past periods. "This shows the impact of ETFs on Bitcoin's correlation with the S&P 500 and its potential separation from other cryptocurrencies," Winterflood said.

The spot-Bitcoin ETFs have been highly successful since their launch, drawing nearly $13 billion in net inflows within four months. This makes them one of the most successful product launches in the industry’s history. Although demand slowed with a net inflow of $1.3 billion in May, the pace seems to be picking up again, with $542.9 million in net flows recorded in the past two days alone.

Currently, Bitcoin is trading around $70,000. A report by Hashkey indicates that Bitcoin outperformed the S&P 500 by five times from January to April 2024. Bitcoin, which accounts for 53% of the entire crypto market cap, has delivered a 57% return year-to-date, whereas the S&P 500 recorded a 12.20% growth in the same period.

This performance underscores Bitcoin's appeal to investors, especially in the context of spot-Bitcoin ETFs. The correlation with the S&P 500 suggests that Bitcoin is increasingly seen as a mainstream financial asset, while its potential separation from other cryptocurrencies indicates its unique position in the market.

As Bitcoin continues to be influenced by US market activities, the role of spot-Bitcoin ETFs will likely remain significant. These financial products have not only increased trading volumes but also helped integrate Bitcoin into the broader financial system. The reduced volatility during US trading hours and strong performance compared to traditional assets highlight Bitcoin's growing maturity as an investment.

Continued inflows into spot-Bitcoin ETFs suggest sustained investor interest. While the pace of inflows may change, the overall trend shows robust demand for Bitcoin as part of diversified portfolios. The success of these ETFs and Bitcoin’s strong performance point to a promising future for cryptocurrency in global financial markets.

In conclusion, the launch of spot-Bitcoin ETFs has driven unprecedented trading volumes during US market hours, significantly impacting Bitcoin’s market dynamics. With substantial net inflows and a growing correlation with the S&P 500, Bitcoin is establishing itself as a major financial asset. The continued success of these ETFs and Bitcoin’s strong year-to-date performance suggest a bright future for the cryptocurrency within the broader financial landscape.

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