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Welcome to another insightful edition of the "What Happened to Bitcoin ETF?" newsletter. In this issue, we dissect the ETF market's dynamics from May 13th to May 17th, providing a detailed examination of asset movements and shifts in market perception. Here's what you can expect in this week's analysis:

• AUM and ETF Price Dynamics: Analyzing AUM changes in both U.S. and Hong Kong ETFs.

• BTC Holdings Weekly Flow: Reviewing weekly BTC holding fluctuations of U.S. and Hong Kong ETFs.

• Trends in GBTC Outflow: Examining GBTC outflows and their impact on the Bitcoin market.

• Looking Ahead: What to expect in the coming week.

Join us as we dive deep into the data and extract critical insights from the past week!

1/ Total AUM and ETF Price Dynamics:

Weekly AUM Overview:

From May 13th to May 17th, the financial landscape for Bitcoin ETFs experienced significant volatility, reflecting broader movements in the cryptocurrency market.

The total Assets Under Management (AUM) began at $52.10 billion on May 13th, dipping to $51.03 billion by May 14th. However, following the release of 13F filings on May 15th, which revealed that an impressive 937 professional investors had invested in at least one Bitcoin ETF during the first quarter, the AUM saw a substantial rebound. It surged to $54.95 billion on May 15th, slightly decreased to $54.51 billion on May 16th, and then jumped to $56.06 billion by May 17th.

This marked increase underscored the significant impact of investor sentiment and institutional participation on the valuation of Bitcoin ETFs, driving a notable recovery and growth in the market.

🇭🇰 Hong Kong ETF AUM Overview:

The total AUM of the Hong Kong Spot Bitcoin ETF observed modest fluctuations throughout the week, commencing at $236,432,000 on May 13th and dipping to $228,692,000 by May 14th. The market was closed on May 15th, but on May 16th, the AUM slightly recovered to $231,046,000 and eventually rose to $237,616,000 by May 17th.

The cumulative increase in AUM by $1,184,000 over this period is primarily attributed to the ETF's price increase, which was influenced by a significant surge in the Bitcoin spot price of over 9% during the week.

Concurrently, there was a net outflow of 580 BTC from the holdings of three asset management firms, indicating a divergence between the increased AUM and actual Bitcoin holdings.

2/ BTC Holdings Weekly Flow:

Ending Holdings on May 17 (WoW Change):

• GBTC (Grayscale): 288,954 BTC (-2,130 BTC)

• IBIT (BlackRock): 276,561 BTC (+1,725 BTC)

• FBTC (Fidelity): 156,780 BTC (+3,768BTC)

• ARKB (Ark 21Shares): 47,440 BTC (+3,905 BTC)

• BITB (Bitwise): 35,749 BTC (+1,962 BTC)

• HODL (VanEck): 9,588 BTC (+255 BTC)

• BRRR (Valkyrie): 8,561 BTC (+456 BTC)

• BTCO (Invesco Galaxy): 6,962 BTC (+140 BTC)

• EZBC (Franklin Templeton): 6,032 BTC (+58 BTC)

• BTCW (WisdomTree): 1,163 BTC (+42 BTC)

• DEFI (Hashdex): 178 BTC (0 BTC)

Total: 838,090 BTC (+10,240 BTC)

🇭🇰 Hong Kong ETF Holdings on May 17 (WoW Change):

• ChinaAMC (9042): 1,593 BTC (-346 BTC)

• Harvest Global (9439): 874 BTC (-234 BTC)

• Bosera Hashkey (9008): 1,109 BTC (0 BTC)

Total: 4,155 BTC (-580 BTC)

3/ GBTC(Greyscale)'s Outflow Trend:

Last week, the flow dynamics for GBTC demonstrated a notable shift, contrasting sharply with prior trends. The week commenced with significant outflows, with 1,735 BTC leaving on May 13th and a smaller outflow of 12 BTC on May 14th.

The trend of outflows continued on May 15th, with an additional 839 BTC exiting. However, the pattern reversed towards the end of the week. On May 16th, GBTC experienced a net inflow of 397 BTC, and on May 17th, it gained 59 BTC.

The recent flow dynamics for GBTC indicate a reversal towards the end of the week, transitioning from a net outflow to a net inflow, while the overall flow for Bitcoin ETFs maintained a net inflow throughout the week. This suggests that the initial outflow from GBTC might have been redirected to other ETFs, potentially including BlackRock's IBIT and Fidelity's FBTC. Investors could be reallocating their assets to these ETFs to take advantage of lower fees or to leverage the stronger brand recognition of these firms for long-term investment strategies. This movement highlights strategic adjustments within the Bitcoin ETF market, underscoring investor attentiveness to both cost efficiencies and brand reliability.

• Note: All data sources are from the Bitcoin ETF Fund Flows.

4/ Looking Ahead: The Future of the Bitcoin ETF Market

The first quarter of 2024 has been transformative for Bitcoin ETFs, with over 1,500 investment firms significantly investing in this sector. Leading firms like Millennium Management and Susquehanna International Group have injected billions into the market, signaling robust confidence in Bitcoin as an investment.

Matt Hougan, CIO of Bitwise, highlights the unprecedented level of institutional holding compared to historical launches like the Gold ETF, which attracted only 95 professional investors during its initial period. Institutions now hold about 20% of Bitcoin ETF assets. Hougan emphasizes that current allocations are merely a "downpayment." For instance, Hightower Advisors, which has $68 million invested, represents only 0.05% of its assets. A shift to just 1% allocation could mean an investment of $1.2 billion by this single firm. Multiplied across the growing number of participants, the potential market expansion is immense.

Adding to this trend, Wisconsin’s pension fund has recently incorporated Bitcoin into its portfolio, purchasing over $160 million worth of shares in two newly approved funds. With an AUM of $155 billion, as it allocates more of its funds into Bitcoin ETFs, the inflow will significantly magnify. This move also increases the likelihood that other pension funds will buy into Bitcoin ETFs for portfolio diversification, further propelling market growth.

As we move forward, expect the Bitcoin ETF market to experience further growth and volatility. This sustained institutional interest, combined with potential regulatory developments, could propel Bitcoin prices higher.

Investors should closely monitor regulatory shifts and market trends that will shape this dynamic investment landscape, promising an exciting period filled with opportunities and challenges in the cryptocurrency space.

5/ What’s Hot This Week?: Coinbase Shares Drop Amid CME's New Bitcoin Trading Interest

Coinbase shares fell significantly, down nearly 8% to $202.49 on Thursday, following a report by the Financial Times indicating that the Chicago Mercantile Exchange (CME) might soon introduce spot bitcoin trading. This potential move by CME, a giant in the futures market and designated as a "systemically important financial market utility," signifies a substantial shift in the landscape where Coinbase has previously thrived as the leading crypto exchange in the U.S.

This development could impact Coinbase's market position significantly as CME's entry into the spot bitcoin market introduces a new, highly regulated option for traders, attracting those wary of the less regulated nature of existing crypto exchanges. This week's focus will undoubtedly be on how these market dynamics play out, influencing investor strategies and potentially reshaping confidence in crypto trading platforms.

6/ Investing Bible: Why Overpreparation is Key in Bitcoin Investment

In the realm of financial investments, Bitcoin stands out as a wild card with its mere 15 years of existence and notorious volatility. Morgan Housel's poignant piece, "Never Saw It Coming," brilliantly highlights a universal truth that resonates deeply with Bitcoin investors: the biggest threats are those you don't see coming.

Imagine this: Bitcoin, a digital darling that dances wildly to its own erratic beats, plunging 70-80% overnight. Sounds dramatic? Absolutely. Impossible? Not at all. While institutional investments through ETFs have lent a veneer of stability and attracted a mainstream audience, the cryptocurrency's history is peppered with dramatic upheavals. Just when the market feels it's outgrown its old volatile ways, that's precisely when it can shock you.

Housel articulates a financial strategy that might seem excessively cautious but is perfectly suited to navigating Bitcoin’s unpredictable waters. He suggests a buffer—think of it as an investment life jacket that feels a bit too snug but keeps you afloat during unexpected storms. It's about having enough liquidity that it almost makes you wince, preparing for scenarios that seem as outlandish as a screenplay twist.

Here’s the kicker: The drive for efficiency, particularly in high inflation times, can blind investors to the necessity of surplus. In the Bitcoin universe, where the next big drop could be lurking just beyond the bullish trends, not holding enough back-up could see you wiped out in the wake of a surprise downturn.

Thus, the essence of Housel’s wisdom for Bitcoin investors is to anticipate the unanticipable. While planning for every potential scenario might seem an exercise in futility, the alternative—being caught off-guard by the next big shake-up—could be far more costly. In the high stakes game of Bitcoin, sometimes, the smartest move is to prepare for the impossible, because in this digital age, the impossible has a way of becoming reality before you can click 'sell.'

🐦 Hot Tweet of the Week

1/ The Story of a Man Who Lost 99,000 BTC

2/ Invest in Bitcoin. Period.

3/ The QE is Returning

🍫CRYPTO CRUMBS ON THE TRAIL 🍫

Dive into this week's crunchy bites of important news, serving up the freshest updates and insights from the crypto world.

Here's what's on the menu:

1. Bitcoin bulls take charge as SOL, AR, GRT and FTM flash bullish signs

   Bitcoin (BTC) has risen over 8% this week, indicating that lower levels continue to attract buyers. Generally, in a range, traders buy near...

2. Paraguay Proposes Harsh Penalties for Illegal Bitcoin Mining – News Bytes Bitcoin News

   The Paraguayan government is urging lawmakers to pass a bill that would impose up to 10 years in jail for illegal bitcoin miners.

3. Number of new Bitcoin wallets drops to lowest level since 2018

   The seven-day moving average number of new addresses on the Bitcoin network, which approached its all-time high just six months ago, has fallen to its lowest level since 2018. 

4. Michael Saylor Breaks Silence on Bitcoin (BTC) Price Pause: Details

   As Bitcoin (BTC) experiences a period of price pause, Michael Saylor, the chairman of MicroStrategy, has made a public declaration that has...

5. Quant Analyst PlanB Says Bitcoin Flashing ‘2017 Vibes,’ Hints at Final Chance To Accumulate BTC Below $70,000

   Well-known quant analyst PlanB says that Bitcoin (BTC) looks the same as it did in 2017 before witnessing a meteoric ascent.

PS - ‘Roaring Kitty’ is back!

The guy who skyrocketed GameStop's stock from $5 to $120 in 2021, causing massive losses for hedge funds like Citron Capital and Melvin Capital, is back. "Roaring Kitty" (Keith Gill), the Reddit "WallStreetBets" hero, made a post on X (Twitter) on May 13th, and the next day, GameStop's stock soared by 110%. Although the price has since dropped, it still shows a monthly gain of 121%.

This spike in GameStop's stock is great news for Bitcoin for two reasons. First, it indicates there's a lot of idle money around, hinting that a 'Bull crab' market might soon turn into a real 'Bull market.' Second, it highlights the trend towards decentralization. The GameStop saga was essentially a battle between big hedge funds and a community of ordinary folks, mirroring Bitcoin’s ethos of shifting financial power to individuals. Roaring Kitty’s return and the subsequent surge in GameStop’s stock show that this trend is still alive. Bitcoin sits right at the center of this movement.

PS - If you're curious about Roaring Kitty, check out the movie ‘Dumb Money’ over the weekend. It’s entertaining!

Stay charged,

SmashFi Team

P.S. - Follow me on X (@brianhoonjong) for daily doses of insightful updates on Bitcoin ETFs and beyond! 🚀🐦

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“What Happened to Bitcoin ETF?” Newsletter: Dissecting the daily crypto craze with sharp insights and electrifying updates.

Disclaimer: This newsletter is for the brainy and the brave. It's for informational purposes only and not a substitute for investment advice. Always do your own research.