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Bitcoin ETFs Record $4.6 Billion Volume on Debut Trading Day: GBP/USD Climbs After UK Data

Bitcoin ETFs Record $4.6 Billion Volume on Debut Trading Day: GBP/USD Climbs After UK Data

U.S.-based Bitcoin Exchange-Traded Funds (ETFs) experienced an impressive trading volume of $4.6 billion on their debut day. This surge in investor interest followed the approval of these landmark products by the U.S. securities regulator. This development represents a significant milestone for the cryptocurrency industry, challenging the perception of digital assets as risky investments.

As of today, the price of Bitcoin stands at $46,046.38, marking a slight decrease of 0.50%.

BTCUSD Daily Chart

BTCUSD Daily Chart

The Players in the Market

Eleven spot Bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF, commenced trading, instigating a fierce battle for market dominance. Leading the pack in trading volumes were Grayscale, BlackRock, and Fidelity, according to LSEG data.

Regulatory Approval and its Impact

The U.S. Securities and Exchange Commission finally gave the go-ahead for these products after a decade-long standoff with the crypto industry. However, SEC Chair Gary Gensler clarified that this approval does not constitute an endorsement of Bitcoin, labeling it as a “speculative, volatile asset.” Nevertheless, the launch of the ETFs bolstered Bitcoin’s price to its highest level since December 2021.

Fee Adjustments and Market Competition

The regulatory approval ignited intense competition among issuers, prompting some to reduce their product fees below the U.S. ETF industry standard even before the launch. Fees for the new Bitcoin ETFs vary from 0.2% to 1.5%, with several firms offering fee waivers for a specific duration or asset volume.

The World’s Largest Bitcoin ETF

Grayscale received the green light to transform its existing Bitcoin trust into an ETF, thereby instantaneously establishing the world’s largest Bitcoin ETF with over $28 billion in assets under management. Market participants keenly observed bid-ask spreads as the ETFs commenced trading.

Caution Amid Euphoria

Despite the excitement surrounding the approval, some analysts warned of potential premature euphoria. The broader investment community continues to perceive cryptocurrencies as risky, particularly in light of recent scandals such as the collapse of the FTX crypto exchange in 2022.

Crypto Stocks and Future Prospects

Crypto-related stocks initially surged but ended the day lower. However, many anticipate these products to set the stage for more innovative crypto ETFs, including spot ether products. Grayscale CEO Michael Sonnenshein revealed plans to file for a covered call ETF, enabling investors to generate income from options on its spot Bitcoin product.

What is a Bitcoin ETF?

How to Invest in a Bitcoin ETF

Where to Buy a Bitcoin ETF

How to Buy a Bitcoin ETF

Other Market News

EUR/USD Consolidates Below 1.1000 Amid Subdued US Dollar

The EUR/USD currency pair has been consolidating its recent gains, maintaining a position below the 1.1000 mark. This comes as the US Dollar struggles due to expectations of a dovish approach from the Federal Reserve. However, escalating geopolitical tensions are restricting further upward movement for the pair. The upcoming release of producer inflation data from the US is now in the spotlight.

EURISD Daily Chart

The Impact of US Inflation Figures on EUR/USD

Thursday saw increased market volatility following the release of mixed inflation figures from the US. The Consumer Price Index (CPI) rose by 3.4% year-on-year in December, surpassing the market expectation of 3.2%. The Core CPI, which excludes volatile food and energy prices, matched analysts’ estimate with a monthly rise of 0.3%. Looking forward, the Producer Price Index (PPI) is predicted to increase by 1.3% in December. If this forecast is exceeded, concerns over stronger producer inflation could intensify, making it harder for the Fed to control consumer inflation and putting pressure on EUR/USD.

GBP/USD Holds Above 1.2750 After UK Data Release

The GBP/USD pair is trading within a narrow channel above 1.2750. Data from the UK revealed that the real GDP grew by 0.3% monthly in November, while Industrial Production contracted by 0.1% annually. Market attention now shifts to the upcoming release of US PPI data.

GBPUSD Daily Chart

GBPUSD Daily Chart

UK Economy Sees Marginal Growth in November, Recession Fears Loom

The UK’s economy exhibited a slightly stronger than anticipated growth in November, but the threat of a recession looms large. This potential downturn could pose a significant challenge for Prime Minister Rishi Sunak ahead of the expected 2024 elections.

GDP Expands by 0.3% in November, Outpacing Predictions

The country’s Gross Domestic Product (GDP) saw a 0.3% expansion in November, recovering from a 0.3% drop in the previous month, according to data released by the Office for National Statistics (ONS).

Output Shrinkage and the Threat of Technical Recession

However, the economy’s output reduced by 0.2% in the three months leading up to the end of November, surpassing the expected 0.1% decline. The ONS suggests that a contraction or even stagnant output in December could result in a second successive quarter of declining output—signifying a technical recession.

Economic Challenges and the Impact on Sterling

“The lacklustre performance of the economy in November suggests the UK may well have slipped into a recession during the second half of 2023,” commented Ben Jones, an economist at the Confederation of British Industry. Following the release of the data, Sterling experienced a slight dip against the U.S. dollar.

Struggles Amid Rapid Inflation and High Interest Rates

Throughout 2023, the UK economy grappled with gaining momentum as households faced the pressures of rapid inflation and the highest Bank of England (BoE) interest rates in 15 years.

A Closer Look at November’s Economic Output

Data from Friday revealed that November’s economic output was marginally higher by 0.2% compared to a year ago and has only grown by 2.5% since 2019. “The longer-term picture remains one of an economy that has shown little growth over the last year,” stated ONS chief economist Grant Fitzner. However, he also noted, “GDP bounced back in the month of November, led by services with retail, car leasing and computer games companies all having a buoyant month.”

Gold Prices Boosted by Middle East Tensions, Awaiting US PPI Data

Gold prices have seen an upswing for the second consecutive day, benefiting from heightened safe-haven demand due to escalating geopolitical tensions in the Middle East. Despite this, the commodity remains below the $2,040-2,042 threshold, suggesting caution for investors given the uncertainty surrounding the Federal Reserve’s rate cut path.

XAUUSD Daily Chart

XAUUSD Daily Chart

Disclaimer:

All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partner’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may read it. Past performance is not a reliable indicator of future performance. 

Author

  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.