Analysis of the Impact of Institutions Getting on Board in the Crypto Market

Recently, more and more well-known institutions have submitted applications for Bitcoin spot ETFs to the SEC, including several institutions such as the world's largest asset management company BlackRock, indicating their willingness to get on board, which brings new opportunities to the crypto market. To gain deeper insights into the impact of institutional entry on the market, we analyzed the trading conditions of the listed Bitcoin spot ETFs, futures ETFs, and trust funds, and reached the following findings:

1. The total holdings of the three major funds BTCC.U, BTCE, and GBTC amount to approximately 675,600 BTC, valued at 20.27 billion USD. Since June, there has been a combined increase of 9,292 BTC, showing an overall upward trend.

2. The total assets managed by the five major Bitcoin futures ETFs ( BITO, XBTF, BTF, BITS, and DEFI ) reached $1.295 billion. Among them, BITO is the only futures ETF that is fully allocated to CME futures contracts, while the other ETFs have also allocated some other assets such as U.S. Treasury bonds.

3. In the past month, the highest return was BITS, reaching 33.20%, with others around 12%. Since the beginning of this year, the highest return is still BITS, reaching 137.65%, with others around 74%. Futures ETFs have outperformed spot ETFs and trust funds.

4. After the news of BlackRock's application for a Bitcoin spot ETF was announced, the average daily price of Bitcoin spot increased by 2.78% within a week, marking the largest average daily increase brought about by news within the statistical range. Previously, during the month of VanEck's futures ETF application, the average daily increase was 1.56%.

5. The impact of institutional ETF applications and listings on Bitcoin prices may come from three aspects: first, the endorsement of institutional reputation; second, the type of ETF, as news of spot ETF applications usually leads to larger increases; third, the trend of Bitcoin's price at the time, as news is more likely to lead to increases during an upward trend.

Analysis of Bitcoin Spot ETF and Trust Fund Holdings

Purpose Investment, a Canadian investment company, launched the world's first Bitcoin spot ETF in February 2021, which includes 4 trading products. Ordinary users in the United States cannot purchase this ETF. There are also similar closed-end trust funds, such as GrayScale ( issued in the United States as GBTC. The BTCE issued by ETC Group in Germany can be traded on two European exchanges.

As of July 18, the total holdings of the three major funds BTCC.U, BTCE, and GBTC is approximately 675,600 BTC, calculated at $30,000/BTC, which is about $20.27 billion. Among them, GBTC is the largest, holding 625,200 BTC, while BTCC.U and BTCE each hold about 200,000 BTC. Since June, the three funds have collectively increased their holdings by 9,292 BTC, showing an overall growth trend. GBTC has slightly decreased by 0.25%, while BTCC.U and BTCE have increased by 24.83% and 31.07%, respectively.

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Trust funds have no redemption mechanism, and their prices often differ significantly from their net asset values, while spot ETFs allow market makers to provide liquidity; when liquidity is sufficient, prices usually do not have premiums or discounts. This is reflected in the yield performance. As of July 18, BTCC.U had an average yield of about 6.76% this month, with an average yield of 8.84% for the year, which is significantly better than BTCE and GBTC. The latter two had average yields of -5.27% and -26.39% this month, with average yields of -5.85% and -38.18% for the year, both showing losses but with reduced loss margins.

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BTCC.U performed well in terms of yield, but its trading volume was not the highest. In July, the average daily trading volume of BTCC.U was 99,500 units, while BTCC was 221,700 units, totaling 321,200 units, which is higher than BTCE's 154,000 units but lower than GBTC's 3,926,000 units. In June, as more institutional application news was announced and BTC prices rebounded, the average daily trading volumes of the four funds all increased month-on-month: BTCC.U rose by 74.89%, BTCC by 47.27%, BTCE by 23.66%, and GBTC by 112.67%. Since July, the average daily trading volumes of BTCC.U, BTCC, and GBTC have continued to grow.

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Bitcoin Futures ETF Analysis

Currently, there are multiple Bitcoin futures ETFs listed in the United States. As of July 18, the total assets managed by the five major Bitcoin futures ETFs BITO, XBTF, BTF, BITS, and DEFI reached $1.295 billion. ProShares' BITO, issued in October 2021, is the largest, with total assets of $1.199 billion. XBTF and BTF, issued by VanEck and Valkyrie, are next in size, with total assets exceeding $30 million and $40 million, respectively.

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These futures ETFs primarily track CME Bitcoin futures contracts. BITO is the only ETF that is fully allocated to CME futures contracts and implements a "rolling" strategy. Other ETFs also allocate part of their assets to other investments, such as XBTF and BTF allocating to US Treasury bonds, BITS allocating to other blockchain ETFs, and DEFI allocating to cash.

In terms of capital flow, BITO has seen a net inflow of $259 million over the past month, the largest scale. BTF and BITS also had a small net inflow, approximately $1.35 million and $790,000 respectively. Since the beginning of this year, all five ETFs have had net capital inflows, with BITO at approximately $333 million, followed by XBTF at around $6.58 million, and the others at a lower amount.

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BITO has the highest average daily trading volume, approximately 9.9691 million shares, exceeding GBTC by 153.93%. Other futures ETFs have lower trading volumes, with BTF around 383,800 shares, XBTF around 17,800 shares, and the remaining ones less than 10,000 shares.

BITO is far ahead in terms of scale, inflow, and trading volume, but its returns are not the highest. The highest return in the past month was BITS, reaching 33.20%, while others were around 12%. Since the beginning of this year, BITS is still the highest at 137.65%, with others around 74%. A broader allocation of BITS in encryption assets may lead to higher returns. Overall, the performance of futures ETFs is much better than that of spot ETFs and trust funds.

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Analysis of the Impact of ETF News on Bitcoin Prices

It is undeniable that institutional entry brings funds to the market, and news related to ETF applications and issuance can also affect Bitcoin prices. We have analyzed the changes in Bitcoin prices after certain ETF applications and listing news over a period of time to assess this impact.

After the announcement of BlackRock's application for a Bitcoin spot ETF, the price of Bitcoin increased by 19.49% within a week, with an average daily increase of 2.78%, the largest in the statistical range. The market has high expectations for leading institutions to get on board.

During the rapid growth period of GBTC from October to December 2020, the average daily increase of Bitcoin was 1.87%. However, in the first week after the listing of GBTC, Bitcoin only had an average daily increase of 0.42%.

Other larger average daily increases include: VanEck futures ETF application month 1.56%, Jacobi spot ETF approval month 1.33%, Fidelity/Wise Origin and SkyBridge Capital spot ETF application month 1%. Some news did not drive price increases, such as the recent Valkyrie spot ETF application day when Bitcoin fell by 1.15%.

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The impact of institutional ETF applications and listings on prices may come from three aspects: first, the reputation of the institution; large institutions like BlackRock can boost confidence; second, the type of ETF; spot ETF applications usually have a greater increase; third, the trend of Bitcoin prices at the time; news is more likely to lead to an increase during an upward trend.

Recently, the rise in Bitcoin prices is difficult to attribute to a single factor. In addition to the news from BlackRock, the record high on-chain transaction volume is also an important factor. On July 18, there were 582,500 on-chain transactions, an increase of 210.83% compared to the beginning of the year. After May, transaction volumes have remained high for most of the time, reflecting improvements in the application fundamentals, which may drive prices up.

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The impact of news is complex; the extent to which ETFs can bring in scale of funds and confidence depends on various factors. The development of ETFs is closely linked to the overall market, with both complementing each other. In the future, we will continue to monitor the trading situation of Bitcoin ETFs.