A look at crypto ETF milestones in 2023 — and where spot bitcoin funds stand

Blockworks2023/12/27 00:28

By:Blockworks

Several crypto ETF firsts this year have perhaps been overshadowed by the spot bitcoin ETF saga that could see a resolution in the coming weeks

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Several crypto ETF firsts in 2023 have perhaps been overshadowed by the unresolved spot bitcoin ETF saga.

Volatility Shares launched the first leveraged bitcoin futures ETF in the United States. The US Securities and Exchange Commission also gave ether futures funds the green light — two years to the month after the first BTC futures ETFs hit the market.

While Volatility Shares’ 2x Bitcoin Strategy ETF (BITX) has grown to roughly $170 million in assets, the initial interest in ether futures ETFs has left many underwhelmed .

The six ether futures ETFs that launched on Oct. 2 had combined assets under management of about $34 million, as of Dec. 20. The Valkyrie Bitcoin and Ether Strategy ETF (BTF), which changed its investment strategy to include investments in ether futures contracts at that time, has had flat net flows since then, according to ETF.com data.

As for crypto funds seeing investor interest of late, the first and largest bitcoin futures ETF — the ProShares Bitcoin Strategy ETF (BITO) — saw its assets under management peak at $1.7 billion earlier this month, according to YCharts data .

But Bloomberg Intelligence analyst Eric Balchunas said on Bloomberg TV last month there could be an “exodus” of assets from BITO when spot bitcoin ETFs are approved.

Funds that hold bitcoin directly — proposed by a range of fund groups over the past decade — have not yet gained the regulatory go-ahead, however.

The SEC is also considering planned spot ether ETFs — another 2023 development currently taking a back seat to the bitcoin ETF race.

Read more: With all eyes on bitcoin ETF decision, SEC kicks ether can down the road

As investors await a ruling on spot ETFs, some have more recently turned to funds investing in blockchain- and crypto-related stocks.

Such funds had seen record weekly inflows in the first half of December , according to CoinShares data. The Amplify Transformational Data Sharing ETF (BLOK) has been the main beneficiary, notching $267 million of net inflows from Dec. 1 to Dec. 20, according to ETF.com.

Spot bitcoin ETF saga coming to a head?

The list of issuers trying to launch a spot bitcoin ETF continues to grow, with Tidal Investments and 7RCC filing for a fund that would hold BTC and carbon credit futures contracts.

The SEC’s deadline to rule on a spot bitcoin ETF proposal by Ark Invest and 21Shares is Jan. 10. The regulator could choose to approve or deny other similar funds — including those from traditional finance giants BlackRock and Fidelity — at that time.

Read more: Lucky 13? Where spot bitcoin ETF proposals stand ahead of judgment day

Fund firms have been meeting with SEC officials in recent weeks to discuss their planned bitcoin funds. BlackRock has had five such meetings , including one on Tuesday. Grayscale, which continues trying to convert its Bitcoin Trust (GBTC) to an ETF after its August court win against the SEC , also met with the regulator this week.

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A topic of conversation has been in-kind and cash creation and redemption models for the funds, according to meeting memorandums.

Grayscale appears to be arguing in-kind transactions are more efficient, but acknowledged not all authorized participants can facilitate them for bitcoin funds — suggesting that spot bitcoin ETFs should offer both models.

Bloomberg Intelligence analysts continue to put the chance of spot bitcoin ETF approval by Jan. 10 at 90% amid the continuous meetings and application amendments.

The ongoing discussions between the SEC and those vying to launch such products support the “base case” of Compass Point Research that the regulator will OK bitcoin ETFs next month, analysts Chase White and Joe Flynn said in a Dec. 15 research note.

“However, with meetings still happening and the holidays coming up, we think there’s a chance the SEC isn’t quite ready to approve ETFs in early [January] and will ask Ark Invest/21Shares…to refile the application to give the SEC more time, rather than reject it outright,” they added.

Neena Mishra, director of ETF research at Zacks Investment Research, previously told Blockworks that if spot bitcoin ETFs are approved, “the debut of ether spot ETFs would not be far behind.”

Expected big impact for BTC funds

Segment observers expect that spot bitcoin ETFs would see significant investor interest if allowed to launch, which in turn could spur BTC’s price to jump.

Bitwise Chief Investment Officer Matt Hougan said during a webinar in August that his firm estimates that US spot bitcoin ETFs could attract $55 billion in net flows in their first five years on the market.

Galaxy Digital research associate Charles Yu said in an October report that a projected $14.4 billion of year-one inflows into spot bitcoin ETFs could cause the price of bitcoin to increase by 74% in the 12 months following approval.

Yu’s research analyzed the impact gold ETFs had on the precious metal’s price .

In the shorter term, VanEck research analysts predict spot bitcoin ETFs could see $1 billion of inflows in their first few days and roughly $2.4 billion within a quarter.

Samir Kerbage, chief investment officer at Hashdex, said in a webinar earlier this month that he too expects between $1 billion and $10 billion to flow into such products in the first few weeks and months. The size of spot bitcoin ETFs would then be set to “grow exponentially” in the coming years, he added.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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The US dollar has risen 5% against the euro, with some investors expecting further strengthening. The options market has become strongly bearish on the euro, as concerns over France’s fiscal situation and political uncertainty are creating pressure points for the eurozone. Laura Matthews/Saqib Iqbal Ahmed, Reuters New York, October 8 – This fall, the dollar surged to an 18-month high, with the latest rally fueled by uncertainty across the Atlantic, prompting some investors to bet the dollar will appreciate further. Analysts say the dollar continues to receive support from high—and possibly rising—US interest rates, robust economic growth, and persistent inflation risks. However, broader pressure centered on France’s massive fiscal deficit, potentially spreading to Italy and the wider eurozone, is emerging as a primary driver for the dollar in the coming months. So far this year, the dollar has appreciated about 5% against the euro, boosting the dollar index .DXY, which measures the dollar’s strength against six major currencies, including the euro (its largest component). “The euro remains under pressure, limiting one of the main alternatives to the dollar,” said Yuuto Shinohara, Senior Investment Strategist at Mesirow Currency Management. Last week, the yield spread between French and German 10-year government bonds recorded its largest weekly increase in decades, while the Italy-Germany yield spread saw its biggest weekly surge since the pandemic. The euro EUR= was last at 1.1183, down 0.67% against the dollar. “The market is focused on countries that, due to political dysfunction, cannot restore sustainable fiscal trajectories,” said Karl Schamotta, Chief Market Strategist at Toronto’s Corpay. One concern is that the euro no longer receives much support from the European Central Bank’s hawkish signals. The ECB raised rates by 25 basis points in September—its second hike this year to counter energy-driven inflation—but the euro fell after the decision, as markets worried about the impact of future hikes on the economy. Typically, rising European bond yields support the euro, but the euro's muted response suggests investors are increasingly concerned about growth and fiscal risks. Rising energy prices could add further pressure. “Structurally, Europe is a major energy importer and is more manufacturing-dependent than the US. The impact is obvious: high energy prices will drag down the region,” said Benjamin Ford, a researcher at Macro Hive. Ford expects the euro to fall to $1.10 within the next month, nearly 2% lower than current levels. “The US medium-term outlook seems stronger, while Europe is more susceptible to shocks,” Ford said. Policy Missteps Investors are also weighing whether the ECB can continue fighting inflation without causing greater harm to already weakening economies. The eurozone inflation rate (link) exceeded expectations in September, and with energy costs surging, it may rise further in coming months, keeping pressure on the ECB to hike rates. “There’s clear asymmetric downside risk for the euro at present,” said Dan Tobon, Citi’s Head of G10 FX Strategy in New York. “One of the likeliest triggers is policy error—if the ECB overtightens at a time when markets can’t bear it.” Euro risk reversal for one-month options, which measures whether traders are paying more to hedge against euro losses than gains, hit its most bearish level since March last Friday, while the three-month indicator touched its lowest point since June 2024. Federal Reserve policymakers have signaled that inflation risks remain high, which has helped keep US Treasury yields at multi-year highs. “Yields continue to rise, and US rates have an absolute advantage over most developed markets,” Shinohara said. Federal funds futures show about an 84% chance of at least one more 25-basis-point hike by December. Although few strategists expect the dollar to surge dramatically from current levels, they note that US economic resilience, sustained high yields, and Europe’s unique risks continue to tilt the balance toward the dollar. “For now, this imbalance looks very unfavorable for Europe,” Citi’s Tobon said. (For the convenience of non-native English speakers, Reuters automates translation of its reports into several other languages. As automated translation may be flawed or lack necessary context, Reuters does not guarantee the accuracy of such translations. They are provided solely for the readers’ convenience, and Reuters accepts no liability for any damage or loss arising from use of automated translation.)

路透社•2026/10/08 10:11