The launch of the new U.S. Spot Bitcoin ETF in January after receiving approval from the U.S. Securities and Exchange Commission (SEC) has dramatically changed the landscape of the cryptocurrency industry and appears to be transforming the traditional financial sector.

Indeed, the unprecedented attention and initial demand for the new ETF in its first two months has led to an urgent need for traditional financial firms to analyse Bitcoin and cryptocurrencies in greater depth.

Global trading and investment firm Exante, which provides market access to equities, ETFs, currencies, metals and bonds in more than two dozen territories, recognised that offering ETFs would also require offering BTC, quickly embracing Bitcoin as a legitimate new asset class.

Focusing on Cryptocurrency ETF Analysis

Exante is publishing a digest called "The Crypt" that focuses on crypto ETFs, with analyses based on the firm's proprietary data as well as insights provided by third parties, and the first issue of the digest provides useful data, analyses, and speculation on how the BTC ETF has performed and where it may be headed in the future.

The first paragraph begins by getting right to the point and setting a bullish tone: "Our clients are fully engaged, investing a higher percentage of their money in these new ETFs than the market average. For example, when Bitcoin hit a new high on Monday 11th March, our clients' AUM was up 11.18% year-over-year day-over-day, compared to the market's total AUM which was actually -0.97%.

This dovetails with recent analysis by JP Morgan, which compared the BTC ETF to the gold ETF and noted that even as the bitcoin fund saw strong inflows, the gold ETF saw the opposite trend. In short, bitcoin is catching up to gold when it comes to ETFs, and there are signs that attitudes towards new bitcoin funds are detached from broader sentiment.

Exante's data also shows that the firm's clients are switching from previously existing bitcoin products to new ETFs.

Thus, it appears that the newer products are not only creating new demand, but also attracting investors who are open to cryptocurrencies. On a related note, it's important to note that among the new ETF issuers are financial giants BlackRock and Fidelity, two companies that can exert a superb gravitational pull.

"Bitcoin's surge has been driven largely by the tremendous success of spot bitcoin ETFs, including those from BlackRock and Fidelity Investments, which now control about 69 per cent of the market and have already attracted about $10 billion in net inflows," Exante notes.

"The $10 billion figure is actually growing further, and the driving force behind the growth in EXANTE customer interest has a lot to do with the revitalisation of the cryptocurrency market as a whole. Moreover, the great success of the ETF so far seems to be creating a virtuous circle for Bitcoin and other digital tokens."

Since shortly after the launch of the ETF, the surge in Bitcoin's price has broken previous trends, hitting all-time highs ahead of the upcoming halving event in April, something that had never happened in Bitcoin's previous four-year halving cycle.

We've also seen Bitcoin's exuberance spread to all cryptocurrencies, with recent intense trading around meme coins launched on the Solana blockchain, and the price of the SOL token itself hitting a new high since 2021.

What's next?

The Exante digest concludes by wondering whether the current level of demand for Bitcoin is sustainable, noting that while the European market has been offering cryptocurrency ETPs since 2019, the approval of the US spot BTC ETF was "a watershed moment," meaning that "U.S. investors can access the spot price of Bitcoin in their brokerage accounts through a lower-risk ETF structure."

Additionally, the digest cites data from The Block outlining how all the ETFs that provide exposure to the bitcoin price do so: "Spot bitcoin ETFs currently account for nearly 90 per cent of the daily volume market share, while bitcoin futures ETFs, which will launch in 2021, account for about 10 per cent. It is becoming increasingly clear that ETFs appear to be improving liquidity for spot bitcoin traders and cryptocurrency market depth."

There is also a global ripple effect, with the report citing recent developments in the UK, where the Financial Conduct Authority (FCA) will "accept applications from recognised investment exchanges to list crypto asset-backed exchange-traded notes. These will be available to professional investors such as investment firms and credit institutions authorised or regulated to operate in financial markets."

In addition, the London Stock Exchange began accepting applications for bitcoin and ethereum exchange-traded notes. The Securities and Exchange Commission of Thailand said it will allow institutional investors and high net worth individuals to invest in cryptocurrency exchange-traded funds.

Finally, the Digest notes that there has been an increase in Bitcoin-related activity in the derivatives space, explaining that in the first half of March, "open contracts, or open interest",

"open positions, or open interest, in the Chicago Mercantile Exchange (CME) bitcoin futures market reached a new peak."

and explained that CME is now the largest holder of bitcoin futures." This dominance did not exist during the November 2021 peak, which was followed by a rapid 31.5 per cent drop in price. In terms of open interest in Bitcoin specifically, the current figure is 27 per cent below the October 2022 peak. All of this points to a growing demand for cryptocurrency-related exposure and hedging by U.S. institutions."

Bitcoin has experienced a price correction since Exante released its digest. However, this is consistent with Bitcoin's price action prior to the previous halving event and does not detract from Exante's conclusion that, while price declines and risk are an ever-present consideration, in the case of new ETFs, "the creation of these instruments is contributing to a more robust and diversified investment environment for digital assets."