Wintermute co-founder Yoann Turpin says the institutional appetite for crypto has been around for years before the launch of U.S. spot Bitcoin and Ethereum exchange-traded funds (ETFs) earlier this year. During an Oct. 30 panel discussion at Binance Blockchain Week in Dubai, he said that venture capital (VC) firms started investing seriously in the Web3 space more than 3 years ago towards the end of 2020.
Binance Blockchain Week Dubai panel discussion (Nick Puckrin, Catherine Chen, Yoann Turpin, Viktor Fischer, and Gunnar Jaerv)
Now he believes that “tradfi-friendly” ETFs will be the catalyst for the next wave of institutional investors to enter the crypto space. Echoing a similar sentiment, fellow panelist and FDUSD COO Gunnar Jaerv said “ETFS are an adapter” that allow the analogue Web2 tradefi industry to plug into the Web3 sector.
Binance Head of VIP and Institutional Catherine Chen acknowledged that there has been a “rapid increase of institutional participation.” She also added that there has been a 250% increase in the number of institutional registrations on the leading platform in some countries.
Binance Head of VIP and Institutional Catherine Chen
She did, however, add that the institutional adoption of crypto is still in its early stages, but believes that the Web2 and Web3 sectors will slowly start to merge.
“FOMO Confirmed”
The panelists’ bullish outlook on ETFs were confirmed on Oct. 29, when the daily trading volume for BlackRock's spot Bitcoin ETF skyrocketed to $3.35 billion, which was its highest level in more than six months. Senior Bloomberg ETF analyst Eric Balchunas suggested that this surge in trading volume is largely the result of people panic buying Bitcoin, which is currently priced very close to its all-time high (ATH) at $72,376.
Balchunas confirmed the presence of a speculative frenzy among ETF investors in an Oct. 29 X post. “FOMO confirmed,” he stated in his post, referencing data that indicated BlackRock's daily inflows reached $642.9 million. Meanwhile, spot Bitcoin ETFs in the U.S. recorded inflows totaling $870 million yesterday, according to data from Farside Investors.
Bitcoin ETF flow (Source: Farside Investors)
Balchunas’ post was made just hours after he speculated whether the impressive trading volume across spot Bitcoin ETFs was indicative of a rise in speculative buyers or merely increased activity from arbitrage traders. “If this is a FOMO frenzy, we’ll see it show up in the flows over next few nights. If not, it means it’s due to HF [high frequency] arb trading or something like that,” he wrote.
He added that BlackRock’s IBIT recorded “by far the most” volume, but was not the only fund to see an uptick in trading activity. In fact, the combined volume for all of the U.S. spot Bitcoin ETFs reached around $4.64 billion on Oct. 29. According to Alex Thorn, head of research at Galaxy Digital, Oct. 29 was the third “highest Bitcoin ETF trading volume day since April 1, 2024.”
Grayscale “Mini” Trusts Raked in $750 Million in First 3 Months
Grayscale's latest Bitcoin and Ether ETFs attracted more than $750 million in net inflows on Oct. 29. The Grayscale Bitcoin Mini Trust (BTC) and Grayscale Mini Ethereum Trust (ETH) were introduced in July after being spun off from Grayscale’s previous Bitcoin and Ethereum funds.
With management fees set at just 0.15% each, the Mini Trusts offer the lowest base fees among spot cryptocurrency ETFs. “The success of BTC and ETH to-date is emblematic of strong client demand for low-cost [crypto] ETPs,” John Hoffman, Grayscale’s managing director and head of distribution and partnerships, said in a statement.
Crypto ETFs are investment vehicles that allow investors to gain exposure to cryptocurrencies without actually directly owning the underlying assets. These funds track the price of cryptocurrencies, like Bitcoin and Ethereum, and are traded on traditional stock exchanges. This structure provides a more accessible and regulated way for investors to participate in the crypto market. It also particularly appeals to institutional investors who may be a bit more hesitant to navigate the complexities of direct crypto ownership.
The launch of several crypto ETFs in the U.S. this year boosted institutional adoption quite a bit. Major fund managers and institutional investors have started to allocate a lot of capital to these products. The introduction of low-cost options, like Grayscale's Mini Trusts, also incentivized investment by reducing management fees, which made it more attractive for institutions to invest in crypto assets.
As a result, the trading volumes for these ETFs have surged. The increased activity indicates not only a growing acceptance of cryptocurrencies as a legitimate asset class but also a willingness among large fund managers to diversify their portfolios with digital assets.
