In a remarkable turn of events, US Bitcoin ETFs achieved a staggering $10 billion in trading volume on March 5, marking a record for these funds, all within a span of under two months. Despite Bitcoin experiencing a new all-time high, the subsequent hours saw a substantial 12% drop in its value.
Bloomberg ETF analyst Eric Balchunas expressed astonishment at the “bananas numbers” generated by ETFs that are still relatively new to the market. Alessandro Ottaviani, a Bitcoin analyst, reported a slightly lower trading volume of $9.58 billion, which still surpassed the prior record of $7.7 billion set on Feb. 28.
Breaking down the figures, BlackRock’s iShares Bitcoin ETF (IBIT) took the lead with a trading volume of $3.7 billion, followed by the Grayscale Bitcoin Trust (GBTC) and the Fidelity Wise Origin Bitcoin Fund (FBTC) with $2.8 billion and $2 billion respectively, according to Ottaviani’s data.
The extraordinary trading activity coincided with significant price fluctuations in the Bitcoin market. The cryptocurrency reached a new all-time high of $69,200 around 3:00 pm UTC on March 5, only to experience a sharp 12% decline, reaching a low of $60,860 approximately five hours later, as reported by Coinmarketcap.
While Bitcoin has partially rebounded to $63,401 at the time of writing, both IBIT and FBTC witnessed an approximately 8.6% decrease on the day. Other US Bitcoin ETFs also recorded similar price drops, according to Google Finance.
In response to the market volatility, pseudonymous analyst Bit Paine humorously noted that for those new to Bitcoin through ETFs, such price swings were a “monthly ritual during bull markets” designed to flush out “leveraged degenerates.”
Balchunas added a perspective, highlighting the difference in market dynamics, stating, “We have limit up and limit down rules and the Fed to protect us from this kinda thing.”
The rapid success and trading volumes of US Bitcoin ETFs underscore the growing interest and participation of investors in these financial instruments. However, the recent price volatility serves as a reminder of the inherent risks in the cryptocurrency market, even as it continues to gain mainstream attention.