Bitcoin ETFs in the U.S. saw a resurgence on Thursday, with net inflows of $39.02 million after a period of outflows. ARKB, led by Ark and 21Shares, was the biggest contributed to these inflows. Ethereum ETFs experienced net outflows for the second consecutive day, with Grayscale’s ETHE losing the whole $20.14 million. Meanwhile, 21Shares added Anchorage Digital Bank and BitGo as custodians for its ETFs, while Grayscale launched its XRP Trust and plans a potential XRP ETF transition.
Bitcoin ETFs Draw Millions
Spot bitcoin exchange-traded funds (ETFs) in the U.S. saw a very welcome turnaround on Thursday. The ETFs recorded net inflows of $39.02 million after experiencing outflows the previous day and consecutive days of outflows a few weeks back.
According to SoSoValue data, Ark and 21Shares’ ARKB led the pack and attracted $18.34 million in inflows. Fidelity’s FBTC also saw a strong day with $11.47 million flowing in, followed by Grayscale’s Bitcoin Mini Trust, which gained $5.18 million. VanEck’s HODL fund and Franklin Templeton’s bitcoin fund recorded smaller inflows of $4.95 million and $3.38 million, respectively. Bitwise’s BITB added $2.22 million to its assets.
Bitcoin ETF flow (Source: Farside Investors)
On the other hand, Grayscale’s flagship GBTC fund was the only bitcoin ETF to register outflows, losing $6.51 million. Among the five bitcoin ETFs with zero flows on Thursday was BlackRock’s IBIT, the largest spot bitcoin ETF by net assets. It has not seen net inflows since Aug. 27.
The 12 bitcoin ETFs combined had a lower daily trading volume of $896.92 million, down from $1.27 billion on Wednesday. So far, these ETFs have accumulated a total of $17.03 billion in net inflows since their launch in January.
Meanwhile, spot Ethereum ETFs in the U.S. continued to experience net outflows on Thursday, which made it their second consecutive day of losses. Grayscale’s ETHE fund accounted for the entire $20.14 million in outflows, while the remaining eight ether ETFs saw no movement.
Thursday’s total trading volume for the Ethereum ETFs reached $106.14 million, which was a decrease from the $126.22 million recorded the previous day. The cumulative net outflows from Ethereum ETFs now stand at $582.9 million.
Ethereum ETF flow (Source: Farside Investors)
In the broader cryptocurrency market, BTC is currently worth close to $58,032.69 after it experienced a decline to $53,000 following weak non-farm payroll data last Friday. The crypto king was able to recover to its current level following the recent election debate between Kamala Harris and Donald Trump and the release of consumer price data.
Investors are now focusing on next week’s Federal Open Market Committee (FOMC) meeting. CME Group’s FedWatch Tool indicates a 57% chance of a 25 basis-point rate cut and a 43% chance of a 50 basis-point reduction.
Ether Sentiment Needs Small Boost for Bull Rally
Although Ethereum ETFs are struggling to attract inflows, ETH’s trader sentiment only needs a slight uptick to trigger a potential price spike, according to CryptoQuant contributor Burak Kesmeci. In a note from Sept. 12, Kesmeci shared that a rise in ETH’s funding rate above 0.015 could signal the beginning of a bull rally.
ETH’s funding rate currently sits at around 0.0056%. This is comparable to its level in September of 2023 before it surged, which resulted in a big price increase.
Burak Kesmeci’s note (Source: CryptoQuant)
The funding rate serves as a small market fee that helps to align futures with spot prices and stabilize perpetual contracts. A higher funding rate indicates greater market optimism as traders are more willing to hold long positions. According to Kesmeci, support from the futures market is critical for ETH’s price to see another parabolic rise.
In September of 2023, Ethereum’s funding rate increase led to a 166% price surge over the next six months, which pushed ETH’s price to $4,006 by March 13. However, ETH has struggled to close above $2,500 since Sept. 2, a crucial level for traders.
Critics have pointed out that the leading altcoin’s performance has lagged behind Bitcoin, despite hopes that the launch of spot Ether ETFs would provide a boost to its price.
Futures traders are still skeptical about ETH’s ability to break through this key level in the near term. If it does, $576.28 million in short positions could be at risk of liquidation, according to CoinGlass data.
21Shares Adds New Custodians for Crypto ETFs
In other ETF news, Asset manager 21Shares announced the addition of Anchorage Digital Bank and BitGo as custodians for its spot crypto ETFs. They will be joining Coinbase, which is already serving as custodian for 21Shares’ U.S. spot crypto ETFs.
These ETFs include the ARK 21Shares Bitcoin ETF (ARKB) and 21Shares Core Ethereum ETF (CETH). Andres Valencia, head of investment management at 21Shares, pointed out that it is important to diversify custodians to boost the safety and security of their products.
This move makes 21Shares one of the first U.S. spot crypto ETF issuers to expand beyond Coinbase as the sole custodian. Nate Geraci, president of The ETF Store, commented that more issuers are now likely to diversify custodians to reduce the risk of a single point of failure.
The number of regulated digital asset custodians in the U.S. is growing. In August, Fireblocks received approval from New York’s financial regulator to offer asset custody services. Other institutional players, including Coinbase Custody Trust, Fidelity Digital Asset Services, and PayPal Digital, are similarly licensed. These qualified custodians follow very strict standards for secure storage, using cold-storage wallets and multiparty computation (MPC) to authorize transactions, with depositor insurance against risks.
The U.S. Securities and Exchange Commission (SEC) has been enforcing the custody rule to ensure proper safeguarding of investor funds. In September, the SEC even charged fund adviser Galois Capital Management for failing to properly custody client assets, including holding funds with the now-defunct FTX.
Grayscale Launches XRP Trust, Eyes ETF Transition
Meanwhile, Grayscale Investments launched the Grayscale XRP Trust, offering investors exposure to the XRP cryptocurrency. The trust was announced on Sept. 12, and is now open for daily subscriptions by eligible individual and institutional accredited investors.
Like Grayscale’s other single-asset investment trusts, the XRP Trust is solely invested in XRP, the native token of the XRP Ledger (XRPL).
The launch of this trust could be a step toward the development of an XRP ETF. While ETFs require approval from the SEC and are marketed to retail investors, trusts have lighter regulatory requirements and are aimed at accredited investors.
Grayscale outlined a four-phase life cycle for the XRP Trust, which could potentially culminate in an ETF, offering increased investor access and transparency as the product evolves.
Rayhaneh Sharif-Askary, Grayscale’s head of product and research, stated that XRP has impressive real-world utility, particularly in facilitating cross-border payments, which take only seconds to complete. The XRP Ledger is a decentralized public blockchain, and supports various use cases like tokenization, decentralized finance (DeFi), and cross-border payments.
Grayscale is mainly known for its Grayscale Bitcoin Trust ETF (GBTC), and holds over 222,000 BTC that is worth close to $12.8 billion. The firm has been one of the largest sellers of Bitcoin through GBTC and has also launched two spot Ether ETFs, which have seen multi-billion-dollar outflows since their debut.
This article was originally Posted on Coinpaper.com
