Bitcoin and ether are starting to recover after hitting their lowest point in six months on Monday. This was the first big test for the new crypto exchange-traded funds.
By early Monday, the total value of all digital tokens had dropped by about $370 billion in just 24 hours. Bitcoin fell below $50,000, and ether saw its biggest one-day drop in three years.
The recent sell-off was linked to a bigger market downturn, with stocks falling worldwide. This time, more investors in crypto are at risk because of the new spot crypto ETFs.
Bitcoin ETFs began trading in January, and ether ETFs started last month. For many investors, this is their first experience with crypto and its ups and downs. According to data from Coinglass, most ETF holders have stayed invested despite the volatility.
Bitcoin and Ether ETF Updates
All spot bitcoin ETFs experienced net outflows of about $169 million. However, the popular IBIT fund from BlackRock didn’t see any withdrawals, and Monday’s outflows are just a small part of the fund’s over $50 billion market cap.
JPMorgan Chase analysts noted that spot bitcoin ETF trading volumes more than doubled on Monday to over $5.2 billion, up from Friday. They also mentioned that this volume was higher than the initial launch in January.
Spot ether ETFs saw an increase of over $49 million across all funds, and JPMorgan analysts noted that trading volumes had “clearly rebounded.”
Bernstein’s digital asset analysts mentioned on August 5 that, unlike past periods when investing in bitcoin through exchanges was more difficult, bitcoin ETFs are now available and “highly liquid,” trading about $2 billion a day.
They also expect more approvals from major financial firms in the third and fourth quarters, which would offer additional opportunities for investing in Bitcoin.
Starting Wednesday, Morgan Stanley will let its 15,000 financial advisors offer spot bitcoin ETFs from BlackRock and Fidelity to clients who meet certain requirements, like having a net worth over $1.5 million.
Until now, wealth management firms on Wall Street only processed trades if clients asked for new spot crypto funds. Morgan Stanley is the first major firm to allow advisors to actively suggest bitcoin investments to clients.
Others are expected to follow suit because of strong demand.
Bitcoin’s latest surge in value has matched the influx of tens of billions of dollars into the new spot crypto funds. This amount could grow significantly as more financial advisors get involved.
Conclusion
Bitcoin and ether are bouncing back after a recent drop. Even though there was a big sell-off, most investors with spot crypto ETFs are sticking with their investments. With higher trading volumes and more financial firms getting involved, interest in crypto is likely to keep rising.
