Bitcoin surges over $30,000 amid ETF excitement

Bitcoin surged past $30,000 per coin in a rise that's been largely attributed to excitement surrounding companies such as BlackRock and WisdomTree looking to launch spot bitcoin ETFs. VettaFi Associate Director of Research Roxanna Islam breaks down the numbers.

Video transcript

- Bitcoin extending its run higher now topping 30,000. And it comes as Wall Street is giving the sector a vote of confidence thanks to a new exchange and ETF applications. And those were coming from BlackRock, Invesco, and WisdomTree.

But our next guest says that even though we're seeing strong performance in crypto ETFs, the flows are still lagging. Joining us now is VettaFi associate research director Roxanna Islam in this week's ETF report brought to you by Invesco QQQ. So let's begin with the latest news here. And I want to call up the YFi Interactive where I have a three-month chart of Bitcoin on the screen here. And you can see this down movement right here, that was actually a bull flag as part of another big uptick here.

But in the last two days, really broken up. And I would say that the stage was set technically and then we got word of the WisdomTree and the BlackRock ETFs. And this is for a spot Bitcoin ETF, which is different from the futures Bitcoin ETF. Is this really going to move the needle?

ROXANNA ISLAM: Yeah, I mean, I think this is an exciting event among some of the action that we've seen this year. I mean, for a while everyone was sort of looking at crypto and they weren't as interested as they were-- as they were in the pandemic. And now everyone's been talking about crypto ETF performance again this year.

And if you look at some of the best performing crypto equity-- sorry, equity ETFs year to date, you know, a large portion of those are actually crypto ETFs. The best performing ones are something like WGMI, which is giving you 170% year to date return, but there's been that huge mismatch between performance and flows. Normally, when you see something like that that's giving that much performance, you're going to see investor inflows. And obviously, a lot of that is based off of underperformance in 2022.

But it doesn't change the fact that if you're an investor and you got into this early this year, you would have made potentially 170% return. So there's still this huge disconnect between flows and performance. And so I think investors are so shying away, but now we're definitely seeing some interesting news coming here with some of these spot Bitcoin filings over the past couple of weeks

AKIKO FUJITA: Yeah, I mean, is that what's going to continue to drive the inflows? What have you seen in terms of the headlines that have particularly turned investors back to crypto after what we saw in the latter half of last year?

ROXANNA ISLAM: Yeah, so I think, first of all, there's several different types of investors we're dealing with. There is a lot of people that got into crypto during this crypto craze in 2020 and 2021. Maybe they were burned in late 2022 and now they're just not interested in crypto anymore.

They don't really care about the good news. They don't really care if there's growth potential there. They're just hands off of crypto.

And then there's maybe some bulls out there who are still looking for some of that exciting price action. Maybe they were, sort of, waiting in the headlines earlier this year, waiting for something, maybe news like this to sort of boost the prices and, sort of, add to their positions. So you have to consider several things.

And a large portion of these crypto ETFs, for example, are crypto equity ETFs. A lot of these are thematic in nature, so these have broadly faded in popularity. People are a lot more into some of these large cap technology and communications names, things like semiconductors.

And then from a thematic perspective, they're into artificial intelligence has been the buzzword this year rather than crypto in the metaverse. So a lot of people are seeing that as something that's a little bit more tangible than maybe blockchain is, which is still something that you have to explain to an investor. So, you know, I think there's several factors going into this. But definitely, there's still some investor interest and investor demand when you see these spot Bitcoin filings coming in.

- I want to talk about bubbles and also AI. And first let's go to the YFi Interactive. I'm going to show everyone a 10-year chart of Bitcoin and I'm sure people here, some of us, remember what happened in late 2017 or early 2018.

That's when Bitcoin first peaked at $20,000. That was when a company could have fixed blockchain to their name and just see a meteoric rise in their stock price. And that gave way to another bubble a few years later. I'm just wondering where we are in the cycle here, especially with the rise of AI. Is there a room-- is there still room to get excited about blockchain, and Bitcoin, and Ethereum, and NFTs in the way that we did a year ago, two years ago?

ROXANNA ISLAM: Yeah, I mean, and I think the market is still normalizing. If you look at what the crypto ETF market is now, it's actually a lot larger than a lot of people think. There's about 25 different crypto ETFs out there. And there's a handful of those futures based ETFs, but there's about 15 of those crypto equity ETFs.

And so a lot of those crypto equity ETFs, they hold very similar things. And a lot of them are very small. Only a few of those have over $100 million in assets.

And a lot of those are also very relatively new. They all basically launched between that time frame between 2021 and 2022. And the latest of those actually launched in September 2022 and it's been pretty quiet since then except for a few closures. We did see about three of those ETFs close since 4Q '22 and then also some of those crypto adjacent ETFs like NFTC, for example, which was the first NFT-focused ETF.

So there's been some sort of consolidation within the industry, but there's still that race towards the spot-based Bitcoin ETF, which I think has definitely picked up with the BlackRock filing. That's something that is still very much in demand. And I think once one person files, a lot of people will sort of fall into that race because there's a big first mover advantage when it comes to something like a spot Bitcoin-based ETF.

AKIKO FUJITA: OK, well, we are seeing a big bump at least on this day. Roxanna Islam from VettaFi, good to have you on tonight.