The VanEck Bitcoin exchange-traded fund (ETF) saw a remarkable development on Tuesday, as its daily trading volume exceeded $258 million. This represented a staggering 14-fold increase from the previous day. Although this achievement was significant, VanEck’s ETF has struggled to keep up with the trading volumes observed in other popular ETFs like BlackRock, Fidelity, and Grayscale, which have consistently led in daily trading volumes since their launch last month. Prior to this surge, VanEck’s crypto-based ETF had reached a previous high of $25.5 million in daily trading volume. Despite the impressive numbers, the company’s ETF was outperformed by competitors like BlackRock, Fidelity, and Grayscale in terms of both volume and net flows.
Bloomberg’s senior ETF analyst, Eric Balchunas, expressed surprise at the exceptional performance of VanEck’s ETF in a recent post on X. He noted the significant surge in trading activity, with daily volume hitting $258 million, representing a fourteen-fold increase over its usual average. Balchunas observed that this surge was not driven by a single large investor but rather by approximately 32,000 individual trades, marking a sixty-fold increase from the norm. Despite the spike in trading activity, Balchunas admitted uncertainty regarding the exact cause behind this surge. He speculated that it could be linked to influence from online communities such as Reddit or TikTok, hinting at a potential impact from retail investors.
VanEck’s head of ETF Products, Ed Lopez, acknowledged the challenge of pinpointing 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 with tight spreads, indicating healthy market activity regardless of investor sentiment. Last week, VanEck announced a reduction in its fee from 0.25% to 0.20% effective on February 21. Lopez noted that this decision to lower the fee had sparked increased interest in the fund and led to greater engagement from retail investors. In comparison, BlackRock and Fidelity charge a fee of 0.25%.
In addition to VanEck’s remarkable performance, there has been a significant surge in trading volumes for WisdomTree’s Bitcoin Fund (WBTC), with the total daily volume reaching $154 million on February 20. This marked an impressive 1,200% increase from the average volume. On the same day, WBTC saw 23,000 individual trades, a substantial rise compared to just 221 trades on the previous Friday. Despite this surge, 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.
Overall, the unexpected surge in daily trading volume for the VanEck Bitcoin ETF signifies a growing interest in cryptocurrency-based investments, particularly within the ETF market. The influence of retail investors and online communities on trading activity highlights the evolving landscape of digital asset investments. With ongoing developments and innovations in the cryptocurrency space, it will be crucial for companies like VanEck to adapt and capitalize on these opportunities to stay competitive in the market.