n a recent X post, Daniel Roberts, the co-CEO of Bitcoin mining company Iris Energy, has raised concerns about a major issue with Spot Bitcoin ETFs. This issue could potentially lead to significant problems in the long run as these funds gain interest from more investors.
Concerns Over Limited Supply
Roberts highlighted Bitcoin's limited supply as a major issue with Spot Bitcoin ETFs. Unlike other ETFs, which can continuously acquire more underlying assets, Bitcoin's supply is capped at 21 million BTC. Once this limit is reached, no more Bitcoin can be mined. This poses a challenge for ETF issuers who need to acquire more BTC to create additional shares for the fund.
Potential Problems and Counterarguments
Roberts expressed concerns about what could happen if there is no more Bitcoin available to acquire. He raised the possibility that if ETFs buy a significant portion of the available Bitcoin (30% in his example), and holders of the remaining Bitcoin refuse to sell, it could create a supply shortage. This could lead to higher prices, forcing some investors to sell their BTC for profits, potentially impacting the stability of these ETFs.
However, some X users argue that this issue may not be as severe as it seems. They suggest that if trades cannot be cleared due to limited supply, the price of Bitcoin would increase, incentivizing holders to sell. This would help balance the market and ensure the availability of Bitcoin for ETFs and other investors.
Spot ETFs' Performance on Their First Day of Trading
Bloomberg analyst James Seyffart provided insights into how Spot Bitcoin ETFs performed on their first day of trading. These funds recorded over $4.6 billion in trading volume, with Grayscale's GBTC accounting for a significant portion. BlackRock and Fidelity also had substantial trading volumes. Seyffart suggested that some of the trading activity may have been due to investors offloading their GBTC shares for Spot Bitcoin ETFs with lower fees.
ProShares Bitcoin Strategy (BITO) ETF also had a busy day, breaking its all-time volume record with $2 billion traded. Bloomberg analyst Eric Balchunas speculated that redemptions may have played a role in the trading activity, as investors moved their funds from BTC futures ETFs to Spot Bitcoin ETFs.