The VanEck Bitcoin exchange-traded fund (ETF) had an unexpected development on Tuesday, witnessing over $258 million in daily trading volume. This marked a 14-fold increase in just one day, surprising industry experts and analysts. Despite this achievement, VanEck’s ETF has struggled to keep up with the trading volumes seen in other popular ETFs like BlackRock, Fidelity, and Grayscale, which have been leading the daily trading volumes since the launch last month.
VanEck’s crypto-based ETF had previously reached a high of $25.5 million in daily trading volume, but it was surpassed by competitors such as BlackRock, Fidelity, and Grayscale in both volume and net flows. Bloomberg’s senior ETF analyst, Eric Balchunas, expressed surprise at VanEck’s exceptional performance, noting that the fund experienced a significant surge in trading activity. The daily volume reaching $258 million was a fourteen-fold increase over the average, driven by approximately 32,000 individual trades – a sixty-fold increase from the norm.
Despite the remarkable increase in trading activity, there remains uncertainty about the cause behind this sudden surge. Balchunas speculated that influences from online communities like Reddit or TikTok could be a contributing factor, hinting at potential involvement from retail investors. VanEck’s head of ETF Products, Ed Lopez, acknowledged the challenge of identifying the exact reasons behind ETF purchases, especially given their trading on the secondary market. However, he emphasized that the day’s trading exhibited robust volume and tight spreads, indicating healthy market activity regardless of investor sentiment.
Last week, VanEck announced a fee reduction from 0.25% to 0.20% effective February 21. This decision to lower the fee of the ETF has sparked increased interest in the fund and drawn more engagement from retail investors. In comparison, BlackRock and Fidelity charge a fee of 0.25%. The fee reduction by VanEck seems to have been a strategic move that paid off, contributing to the surge in trading volume and investor interest in the fund.
WisdomTree’s Bitcoin Fund (WBTC) has also seen a significant increase in trading volumes, reaching $154 million on February 20, a staggering 1,200% rise from the average volume. The fund witnessed 23,000 individual trades on the same day, a stark comparison to just 221 trades recorded the previous Friday. VanEck’s Bitcoin Trust currently ranks as the seventh-largest spot Bitcoin ETF, with assets under management (AUM) totaling $191.9 million. In contrast, WisdomTree’s fund has the smallest AUM, standing at $29.4 million, according to data from Dune Analytics.
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