Pretty much everyone in the crypto community has been all about these newfangled spot Bitcoin ETFs lighting up the trading boards with their wild numbers. High trading volume, they say, screams interest from investors, right? Well… that’s not really the full picture, now is it? Let’s dive deep into this rabbit hole and see what’s really going on. After all, numbers on a screen don’t always tell the whole story.
Greg Cipolaro, the big brain Head of Research over at NYDIG, dropped some truth bombs on us last Friday. According to him, if you’re using daily trading volumes as your North Star for fund flows, you’re barking up the wrong tree. It’s like assuming the loudest person in the room is the smartest— it doesn’t quite add up.
Take Grayscale’s Bitcoin Trust (GBTC), for instance. This giant has been the king of the hill in terms of trading volume, boasting over $20 billion in action since these ETFs hit the scene on January 11. But here’s the problem: despite this massive trading frenzy, GBTC’s assets took a nosedive, shedding over $7 billion. If that doesn’t scream “disconnect,” I don’t know what does.
Now, let’s get into the meat of it. Cipolaro suggests that instead of drooling over trading volumes, we should be eyeballing the turnover ratio. This nifty little metric takes the trading volume and divides it by the fund’s net asset value. It’s like a litmus test for how much of the fund is getting passed around on any given day.
Overall, the spot Bitcoin ETF circus has been parading around with a turnover ratio of 5.3%. But the party really starts when you look at the extremes. Valkyrie (BRRR) and GBTC are the wallflowers with the lowest rates at 2.2% and 2.4%, respectively. Meanwhile, Ark 21 (ARKB) is the life of the party, swinging at an 11.3% turnover ratio. And don’t even get me started on WisdomTree (BTCW) — this little guy, with just about $30 million in AUM, went on a bender with a turnover ratio of 205% over a five-day spree.
This whole turnover ratio business isn’t unique to Bitcoin ETFs. Look at the S&P 500 ETF family; they’ve got their own set of quirks and peculiarities. Cipolaro thinks the options market might shed some light on these anomalies. And hey, if options for these Bitcoin ETFs get the green light, we might see a whole new ballgame in terms of turnover ratios.
While the trading volume might get the headlines and the oohs and aahs, it’s not the end-all-be-all for understanding investor behavior. It’s like judging a book by its cover or a movie by its trailer. Sure, it might give you a taste, but the real flavor is in the details—the turnover ratios, the asset inflows and outflows.
So yeah, who cares if spot Bitcoin ETFs have high trading volume?
