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Bitcoin ETFs outpace silver, become second-largest U.S. commodity ETF

Bitcoin exchange-traded funds (ETFs) have outpaced silver ETFs in the United States in just one week of trading, establishing themselves as the second-largest ETF commodity by assets under management (AUM).

Spot Bitcoin ETFs now command a substantial $28 billion, surpassing the approximately $11.5 billion in AUM held by five silver ETFs. Meanwhile, U.S. funds holding gold have a combined AUM of $96.3 billion spread across 19 ETFs, making gold the largest commodity ETF.

This achievement is credited to the rising demand from both institutional and retail investors seeking exposure to BTC.

“Bitcoin ETFs have exceeded silver ETFs in the U.S. in terms of size, driven by the substantial market interest they have received,” said Bitfinex head of derivatives Jag Kooner.

“The level of trading reflects the pent-up demand for these products, and we expect that it will lead to increased liquidity and stability in the market.”

Grayscale’s conversion of its existing Bitcoin trust into an ETF has also contributed to this development, creating the world’s largest Bitcoin ETF overnight. The Grayscale Bitcoin Trust now holds an impressive 592,098 Bitcoin, surpassing the combined worth of all U.S.-listed silver ETFs.

“The level of trading reflects the pent-up demand for these products, and we expect that it will lead to increased liquidity and stability in the market,” said Kooner.

Bitcoin ETFs gain credibility

The growing interest in Bitcoin ETFs among investors also mirrors a broader trend of portfolio diversification and a recognition of BTC’s unique value proposition. This development underscores Bitcoin’s maturation within financial markets, gaining credibility and recognition as a formidable investment choice.

On the fifth day of trading for these new assets, the cumulative trading volume for the 11 funds exceeded an impressive $12 billion, according to data from Yahoo Finance compiled by The Block.

Kooner emphasized that the excitement surrounding Bitcoin and spot Bitcoin ETFs remains strong and is likely to persist. While some in the investment community still perceive cryptocurrencies as risky, the burgeoning growth of these ETFs could pave the way for more innovative crypto ETFs and introduce new underlying assets, such as ether, into the financial landscape.

In Kooner’s view, Bitcoin ETFs could serve as a catalyst, inspiring investors to delve deeper into cryptocurrency and explore other crypto-related projects.

“The ETF issuers have implemented competitive fee structures, featuring a range of discounted fees and fee waivers which should attract more investors and could lead to further competitive pricing among ETF providers,” said Kooner.

Lower fees and brand recognition are currently crucial factors in drawing investors. The iShares Bitcoin Trust ETF from BlackRock has garnered over $700 million, while Fidelity’s Wise Origin Bitcoin Fund has exceeded $500 million, according to BitMEX Research.

“Fees are clearly a key determinant for success,” said Sui Chung, CEO of CF Benchmarks.

“Those that charge the lower management fees will unsurprisingly make themselves more appealing compared to their peers. Brand recognition is another core aspect.”

Fees among the nine issuers range from 0.19 percent to 0.39 percent, with BlackRock and Fidelity implementing tiered fee structures. BlackRock’s fee structure starts at 0.12 percent for the first $5 billion in assets and the initial 12 months of trading, subsequently rising to 0.25 percent.

Meanwhile, Fidelity starts with a zero fee, increasing to 0.25 percent after July 31. Even at their highest, these fees remain below the average ETF fee of 0.54 percent.