What Is Happening With the VanEck Bitcoin ETF? Trading Volume Explodes

The VanEck Bitcoin exchange-traded fund (ETF) experienced a somewhat unexpected development on Tuesday, exceeding $258 million in daily trading volume, marking a 14-fold increase within a single day.

Despite the achievement, VanEck’s ETF has faced a challenge keeping up with the trading volumes observed in other ETFs, such as BlackRock, Fidelity, and Grayscale, which have led daily trading volumes since last month’s launch.

VanEck’s Surprising Surge in Trading Volume

VanEck crypto-based ETF’s previous high in daily trading volume was $25.5 million. As such, the company’s ETF was surpassed in both volume and net flows by competitors such as BlackRock, Fidelity, and Grayscale.

Bloomberg’s senior ETF analyst, Eric Balchunas, expressed surprise at VanEck’s exceptional performance yesterday in a post on X. He noted that the fund experienced a significant surge in trading activity, with daily volume reaching $258 million, a fourteen-fold increase over its average.

Balchunas observed that this surge was not driven by a single large investor but rather by approximately 32,000 individual trades, representing a sixty-fold increase from its average.

Still haven’t figured out what happened. No one knows. Given how sudden and explosive the increase in number of trades was (500 trades Friday, 50,000 trades today) I’m wondering if some Reddit or TikTok influencer type recommended them to their followers. Feels retail army-ish. https://t.co/WazxSSgFjR

— Eric Balchunas (@EricBalchunas) February 20, 2024

Despite the remarkable uptick in trading activity, Balchunas admitted uncertainty regarding the cause behind this surge. He speculated that it could be attributed to influence from online communities like Reddit or TikTok, suggesting a possible influence from retail investors.

VanEck’s head of ETF Products, Ed Lopez, acknowledged the challenge of pinpointing the exact reasons behind ETF purchases, given their trading on the secondary market. However, he highlighted that the day’s trading displayed robust volume with tight spreads, indicating healthy market activity regardless of investor sentiment.

VanEck Cuts Fees Fueling Investor Interest

Last week, VanEck filed a notice with the Securities and Exchange Commission that it would be reducing its fee from 0.25% to 0.20% on February 21.

According to Lopez, the decision to lower the HODL’s fee has increased the interest in the fund and brought more engagement from retail investors. BlackRock and Fidelity charge a fee of 0.25%.

Meanwhile, there has been a notable surge in trading volumes for WisdomTree’s Bitcoin Fund (WBTC), with the total daily volume reaching $154 million on February 20, an approximately 1,200% increase from the average volume. On the same day, WBTC witnessed 23,000 individual trades, a substantial rise compared to a mere 221 trades on the previous Friday.

VanEck’s Bitcoin Trust currently ranks as the seventh-largest spot Bitcoin ETF, boasting assets under management (AUM) totaling $191.9 million. In contrast, WisdomTree’s fund holds the smallest AUM, standing at $29.4 million, according to data from Dune Analytics.

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