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VanEck's “HODL” ETF Soars: $300M Daily Trades, Up Over 1000%

VanEck's “HODL” ETF Soars: $300M Daily Trades, Up Over 1000%

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The daily trading volume of VanEck's spot bitcoin ETF surged to over $300 million, marking an increase of over 1000% compared to its previous highest trading day.

VanEck ETF Spikes After Fee Reduction Announcement

On Tuesday, VanEck's spot bitcoin ETF (ticker HODL) surpassed $300 million in trading volume as of 1:50 p.m. ET, more than ten times what it traded on its best day so far. This development happened less than a week after VanEck filed a notice saying it would be lowering the fee it charges on its spot bitcoin ETF.

The Bitcoin-based ETF, which was launched on January 11 after a landmark approval by the SEC, had reached its previous daily volume high with a registered $25.5 million on the day of its launch. However, the trading vehicle broke through that limit after achieving $258 million worth of daily volume trading records on 20th February 2024. This significant boost in daily volume represents an almost 14x jump over its daily average. 

BTC ETF Records Increased Trade Numbers

It is also interesting to note that the significant spike in trading volume was not contributed by a single big investment but due to over 32,000 individual trades, which is 60 times the daily average number of trades. 

According to VanEck’s head of ETF, Ed Lopez, 

"Because ETFs trade on the secondary market, it can be challenging to know who or why someone buys an ETF. Today’s trading has sported great volume at tight spreads, which is ultimately what you’d want from an ETF, whether you're bullish or bearish on the market."

Analyst Balchunas’s Perspective

Senior analyst Eric Balchunas, who first pointed out the development on his profile, has followed it up with a plausible explanation for HODL’s skyrocketing daily volume, 

“No one knows. Given how sudden and explosive the increase in number of trades was (500 trades Friday, 50,000 trades today) I'm wondering if some Reddit or TikTok influencer type recommended them to their followers. Feels retail army-ish.”

Balchunas also pointed out that the trading volumes on WisdomTree’s Bitcoin Fund (WBTC) also experienced a significant spike on February 20, jumping roughly 1200% from its average of $154 with 23,000 individual trades. 

Market Conditions And Background

On February 15, VanEck submitted a notice to the United States Securities and Exchange Commission (SEC) stating its intention to reduce fees for its ETF from 0.25% to 0.20%, effective February 21. This adjustment positions VanEck's fees five basis points lower than those of market leaders BlackRock and Fidelity.

The surge in trading volume for the HODL and WBTC funds coincided with a period of heightened, though not excessive, volume in leading market funds, such as BlackRock's iShares Bitcoin ETF. 

According to data from Dune Analytics, VanEck's Bitcoin Trust ranks as the seventh-largest spot Bitcoin ETF, managing assets worth $191.9 million. In contrast, WisdomTree's fund holds the smallest position, with only $29.4 million in assets under management (AUM).

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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