Trading activity in the new Bitcoin ETFs fell rapidly yesterday. While several of the ETFs made it into the top 5 most heavily traded ETFs on Friday, interest on Tuesday, when trading resumed after the MLK holiday, the bloom was off the rose.
Most of the Bitcoin ETFs posted volumes yesterday less 50 percent of their average volume for their first 3 days of trading. EZBC and BTCW were off more than 70 percent. The table below includes other popular ETFs to show that trading volume as a whole yesterday was not off. SPY was actually up 15.4 percent over its 3-day average.
The only Bitcoin ETF that showed a more modest decline in volume was BTCO, off 9.8 percent.
Of course, one large problem, opposing broader acceptance of the Bitcoin ETFs as algo trading vehicles – as compared with the more traditional ETFs – is that they’re not shortable. While they are similar in all other respects as traded through the broker-dealer, Alpaca Markets, who supplies the trading data for this analysis, until the Bitcoin ETFs allow shorting, the acceptance is likely to be limited.
We also looked at the first 30 minutes of trading yesterday to get a sense of the bid/ask spreads (again, as reported by Alpaca Markets).
The bid/ask spread (as expressed in Basis Points) is significantly higher for the Bitcoin ETFs than the most popular ETFs. BTCO, for example, had a bid/ask spread of 20 BPS compared to SPY, which showed a 0.2 BPS spread.
On the positive side, the Bitcoin ETFs recovered somewhat from the Friday early price declines. While the 3-day price decline averaged about a 7% decline, prices yesterday rose slightly, somewhat outperforming SPY.
We will keep watching the Bitcoin ETFs but trading interest, at least among algo traders, is likely to be limited until bid/ask spreads decline further. And, of course, until traders are able to short these ETFs, their utility is likely to be limited.
The author is CEO of MachineTrader.io, a low code/node code software platform that can be used by non programmers to automate their trading.
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Trading activity in the new Bitcoin ETFs fell rapidly yesterday. While several of the ETFs made it into the top 5 most heavily traded ETFs on Friday, interest on Tuesday, when trading resumed after the MLK holiday, the bloom was off the rose.
The long-awaited Bitcoin ETFs debuted in yesterday's trading, making quite a splash. Three Bitcoin ETFs were among the five most actively traded ETFs: GBTC, IBIT, and FBTC, all trading more than 10 million shares.
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