VanEck spot BTC ETF trading volume inspires strength in Bitcoin price

VanEck spot BTC ETF trading volume inspires strength in Bitcoin price

  • VanEck spot BTC ETF, HODL, went parabolic on Tuesday, soaring 14X in a day.
  • With over $258 million in trading volume today, HODL boasts a 60X product average with 32,000 individual trades.
  • WisdomTree’s BTCW and BlackRock’s IBIT are also making headlines with skyrocketing trading volumes.

Bitcoin price has gained strength around this news, reinforced by assertions that MicroStrategy will be buying BTC forever.

The US Securities and Exchange Commission (SEC) approved multiple spot Bitcoin exchange-traded funds (ETFs) in a single go on January 10. The landmark decision has formed the basal theme that continues to drive markets, with a recent development helping Bitcoin price find strength by revitalizing BTC bulls.

VanEck spot BTC ETF goes berserk

Eric Balchunas, a spot Bitcoin ETF expert from Bloomberg Intelligence, has reported that VanEck’s HODL went parabolic on Tuesday, soaring 14X on daily trading volume metrics to $258 million. In his opinion, this is unorthodox considering the issuer’s heft in the market, with the turnout ascribing to 32,000 individual trades only. “This is 60X its average,” says Balchunas.

$HODL is going wild today with $258m in volume already, a 14x jump over its daily average, and it’s not one big investor (which would make sense) but rather 32,000 individual trades, which is 60x its avg. Not sure how to explain.. maybe it was added to a platform over wknd ?

— Eric Balchunas (@EricBalchunas) February 20, 2024

Other BTC ETFs that are also making headlines include WisdomTree’s BTCW, registering $154 million trading volume, representing 12X the investment product’s average and 25X its assets via 23,000 individual trades . This is also out of the ordinary, considering the same investment product registered only 221 trades on Friday. Also, BlackRock’s IBIT has recorded surging trading volumes with Balchunas describing the turn of events as “unsolved mysteries.”

Balchunas negates the assumption that relates surging ETF trading volumes to Bitcoin price drop

According to Balchunas, it is false to assume that the surge in volumes explains the weakness in Bitcoin price, saying it made no sense considering the small assets under management (AUM) and shareholders that the likes of HODL have.

To the ‘bruh volume must be selling bc btc is dumping’ crowd: a) that makes no sense given how little these ETFs had in existing aum/shareholders b) plus you never you see ton of outflows in brand new ETF that is in rally mode c) there are so many other holders of btc besides…

— Eric Balchunas (@EricBalchunas) February 20, 2024

Crypto ETF FAQs

What is an ETF?

An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.

Is Bitcoin futures ETF approved?

Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.

Is Bitcoin spot ETF approved?

Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.

Meanwhile, Bitcoin price appears to be gaining strength after liquidating millions in long positions. The largest cryptocurrency by market capitalization appears to be establishing new support at $51,335. Nevertheless, caution is advised as BTC is still massively overbought, which is often recipe for a correction.

Based on the daily chart for the BTC/USDT trading pair, Bitcoin price is within a range again, living up to the thesis that the market is a liquidity game over a short period of time, where market makers either liquidate traders and investors, or there is a level of liquidity (orders) that market makers targets to collect.

It is upon investors to be cautious about ignoring short-term liquidity games, with the patient and steady hands prevailing.

BTC/SDT 1-day chart

MicroStrategy will buy Bitcoin forever

Meanwhile, MicroStrategy CEO Michael Saylor has articulated in an interview with Bloomberg that he does not plan to sell Bitcoin. Instead, he says, “I’m gonna be buying the top forever,” adding that, “Bitcoin is the exit strategy, it is the strongest asset.”

Stewarding one of the biggest Bitcoin investment companies in the world, Saylor is a proclaimed BTC proponent. The firm’s BTC portfolio is now worth $10 billion (around 190,000 BTC tokens), after recording up to $3.2B in unrealized profit as of last week.