In tune with the flow: March BTC ETP Recap

04 Apr 2022

In tune with the flow: March BTC ETP Recap

March was a massive month for the exchange-traded BTC funds, with net inflows amounting to 12,272 BTC, pushing the global BTC exposure of BTC ETPs above 200,000 BTC.

As bitcoin evolves from an asset traded, held, and used solemnly by cyber hornets to an asset held by cyber hornets, nation-states, and Wall Street, it becomes vital to decipher the BTC trends from the sacred realm of tradfi to navigate the market.The institutional adoption and "productification" of BTC will, with time, lead on-chain analysis to become less and less relevant. I'll get back to this another time, but in sum: you should be careful by accepting easy-going bullish or bearish narratives related to hodler behavior or exchange balances as bitcoin becomes more frequently traded in markets beyond the limits of on-chain analysis. This series sheds light on one such sector: The BTC ETP sector – allowing you to stay in tune with the current flows.

March: Key takeaways

March saw net inflows amounting to 12,272 BTC, leading March to become the strongest month in terms of inflows in ETPs since November last year.
The AUM of the BTC ETPs surpassed 200,000 BTC in March and reached a new all-time high. Since June 2020, Bitcoin ETPs AUM has increased by 136,641 BTC, analogous to 151 days of mining rewards.
All ETP regions saw positive net inflows in March, the Canadian ETFs saw the sharpest growth in March, increasing their AUM by 6,066 BTC.
ProShares saw positive inflows during the rolling period from March 21st to March 25th. All previous rolling periods have been accompanied by sluggish flows, possibly caused by the associated rolling costs. The positive flows during the rolling week in March may be caused by the BTC strength on the backdrop of LFG’s Bitcoin Reserve Strategy.
Europe ended its three-month streak of net outflows and saw substantial inflows in March.
Overall, March was a very strong month for BTC ETPs suggesting a growing demand for BTC exposure in legacy markets.

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Source: Bytetree, VanEck, Proshares, Hashdex, StatusInvest

Strongest flows since November in BTC ETPs

The promising ETP flows from February continued and accelerated in March, leading to net inflows amounting to 12,272 BTC pushing the global BTC exposure of BTC ETPs above 200,000 BTC. March saw the highest BTC ETP inflows since November last year. Overall, the appetite among investors seeking to add BTC exposure through traditional vehicles has grown in all jurisdictions, indicating a more positive sentiment with investors seeking to allocate for further upside.

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Source: Bytetree, VanEck, Proshares, Hashdex, StatusInvest

Since January 2021, BTC ETPs have seen net inflows in 11 out of 15 months. March 2022 is the 5th strongest month in terms of inflows since January 2021. However, it’s worth pointing out that the strength witnessed in April and May last year came on the backdrop of the launch of several new products in Canada, whereas the October and November inflows were caused by the launch of several futures-based ETFs in the U.S. On the other hand, the March flows were not impacted by the launch of any new products and have been caused by organic inflows.

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Source: Bytetree, VanEck, Proshares, Hashdex, StatusInvest

Since June 2020, the global AUM of BTC ETPs has grown by 136,641 BTC, which is analogous to 151 days of BTC reserves. The strong ETP inflows in the last two years have been one important component of absorbing the BTC supply, but it’s far from the only one. From June 2020 until February 2021, Grayscale’s close-ended BTC fund GBTC saw massive inflows, growing by 294,000 BTC from 360,000 BTC to 656,000 BTC. In addition, publicly traded companies have accrued around 225,000 BTC. Now, the Luna Foundation Guard is on track to acquire approximately 60,000 BTC. And, in addition to all these effects, we also have the effects of supply being absorbed by other hodlers. Nevertheless, 136,641 BTC represents substantial growth, and through covering the ETP activity, we are able to interpret how market participants from legacy markets add exposure over time.

All regions experience net inflows in March

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Source: Bytetree, VanEck, Proshares, Hashdex, StatusInvest

European BTC ETPs broke a three-month-long trend of net outflows seeing inflows amounting to 3,393 BTC, while the strong inflows seen in both Canadian and US ETFs from February accelerated further in March. The Brazilian ETFs saw muted activity compared to February.

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Source: Bytetree, VanEck, Proshares, Hashdex, StatusInvest

Europe remains the largest region in the ETP space, but the Canadian ETFs narrowed the lead further in March. Thus, the long-term trend of Canadian ETFs gaining market share over European ETPs still remains, and Canadian ETFs seems likely to overtake the European market by the end of the year.

European ETPs finally see positive flows in March

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Source: Bytetree

After three consecutive months of outflows, the European BTC ETPs saw net inflows in March. The net inflows amounted to 3,393 BTC, lifting the European BTC ETP AUM to 97,096 BTC. This is the highest monthly net inflow recorded in European ETPs since October and the fourth-strongest month witnessed in European ETPs since January 2021.

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Source: Bytetree

As noted in the February report, European BTC ETPs have a rich history, with some of the ETNs having traded consistently since 2015. The older European BTC ETPs are tracker instruments, but ETPs with active redemption programs have been launched in recent years. Trackers still dominate within the European market and account for 63% of the European AUM.

Canadian ETF inflows remain strong

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Source: Bytetree

The Canadian ETFs upped the strong inflows seen in February in March, as the Canadian ETFs saw net inflows amounting to 6,066 BTC, leading the Canadian BTC ETP AUM to reach a new all-time high of 72,253 BTC.The steady and high net inflows to the Canadian ETFs vs. the European ETPs could lead the Canadian BTC ETFs to surpass Europe measured by AUM by the end of the year.

March saw the highest U.S. net inflows since November

The inflows remain high in the U.S. BTC ETFs, as the futures-based U.S. ETFs BTC exposure grew by 2,746 BTC, reaching a new all-time high of 30,935 BTC. We see no signs indicating that BITO’s dominance will dwindle in the U.S. market. In March, Valkyrie’s AUM grew by 29 BTC, while BITO saw inflows amounting to 2,720 BTC, further cementing its position as the dominating fund in the U.S. bitcoin ETF landscape.

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Source: Bytetree, VanEck, Proshares

Further, BITO saw its first rolling week accompanied by net inflows in March. In all previous rolling periods, BITO has experienced outflows or no change. The sluggish flows during the previous rolling weeks have possibly been caused by the associated rolling costs. The positive flows during the rolling week in March is a first in history, which could be caused by the BTC strength on the backdrop of LFG’s Bitcoin Reserve Strategy.

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Source: Proshares

A slow March in Brazil

After the massive inflows to the Brazilian ETFs in February, March was quieter. Brazilian ETFs saw net inflows amounting to 67 BTC in March, leading the total AUM of Brazilian ETFs to reach 2,153 BTC.

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Source: Hashdex, StatusInvest

Zooming back out: Net inflows across the board, as the ETPs see its highest net inflows since November

All regions experienced net inflows in March. The U.S. ETFs saw the strongest month-over-month growth of 10%, driven by strong inflows to BITO. Also, Canadian ETFs saw high net inflows in March, with an 8% MoM growth, outpacing the 7% growth noted last month.

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Source: Bytetree, VanEck, Proshares, Hashdex, StatusInvest

Overall, March was a very strong month in the bitcoin ETP sector, leading the AUM to reach new all-time highs pushing above 200,000 BTC in a period of organic growth. The increased demand for BTC exposure through traditional investment vehicles in bitcoin suggests that the sentiment in the market is improving, also among investors seeking to gain exposure through legacy markets.