U.S. Bitcoin ETFs Hit Record $11.5B Trading Volume Amid Extreme Market Volatility

The U.S. spot Bitcoin exchange-traded funds (ETFs) saw an explosion in trading volume on Friday as the market ran wild on substantial price volatility that saw BTC drop below $80,000 for the first time in six months before recovering to the $85,000 range.

The eight leading bitcoin-backed funds trading on Wall Street recorded a cumulative volume of $11.5 billion in 24 hours, marking the highest ever since the products began trading nearly two years ago.

BlackRock’s IBIT Records $8 Billion in Volume, as Spot Bitcoin ETFs Report $11.5 Billion During Largest Trading Day

Eric Balchunas, senior market analyst at Bloomberg, described the series of events that took place in the spot bitcoin ETF space as an “ERUPTION”. However, he asserted that such a “wild” scale of activity is “normal” whenever the underlying asset is going through a volatile period, calling the ETFs a liquidity release valve.

BlackRock’s iShares Bitcoin Trust ETF (IBIT) – the world’s largest spot bitcoin ETF by assets under management (AUM) – was responsible for the lion’s share of volume, generating $8 billion in trading activity. This action made the fund the most heavily traded in the group, highlighting IBIT’s demand and dominance among institutional investors.

IBIT has been facing a negative streak for the past six weeks, and Friday was no exception, as the fund recorded $122 million in net outflows. Over the past trading week, the ETF has only closed in the green on one day.

Yesterday’s outflow also aligns with BlackRock moving a significant amount of Bitcoin and Ethereum into Coinbase. Arkham Intelligence data shows that the world’s largest asset manager transferred 4,198 BTC ($353.04 million) and 42,237 ETH ($115.53 million) to the exchange, signaling that they were sold off amid falling prices.

Friday was a Positive Day For Spot Bitcoin ETFs, registering $238 Million In Total Inflows

On the contrary, the day turned out to be a net positive for the bitcoin ETFs, as the funds attracted $238.47 million in total inflows. According to data from SoSoValue, Fidelity’s FBTC led the charge with $108.02 million, followed by Grayscale’s Bitcoin Mini Trust (BTC) and Bitcoin Trust (GBTC) with $84.93 million and $61.53 million, respectively, and Bitwise’s BITB at $22.83 million. 

ARK & 21Shares’ ARKB ($39.06 million), VanEck’s HODL ($8.31 million), and Invesco’s BTCO ($35.80 million) also recorded inflows.

IBIT is by far the largest spot bitcoin ETF on the market in terms of net assets. As of November 21, the fund holds 779,425 BTC, valued at approximately $65.34 billion at current rates. This stockpile represents 3.87% of the total bitcoins in circulation. For comparison, FBTC, the second-largest bitcoin ETF, has 197,893 BTC in AUM, valued at $16.65 billion.

This implied a huge investor sentiment shift, especially after IBIT recorded its largest single-day outflow of $523.15 million on Tuesday, November 18.

Bitwise CEO Hunter Horsley wrote in an X post that the company saw more than $40 million in inflows across its three U.S.-listed Bitcoin (BITB), Ethereum (ETHW), and Solana (BSOL) ETFs. He noted that while some investors may be selling, institutions are buying, urging his followers to “buy the dip”.

JPMorgan’s $206 Million IBIT Options Position Reflects Institutional Interest in Bitcoin Longs

American banking giant JPMorgan recently disclosed in a 13-F statement that it holds 5.28 million shares of IBIT, valued at roughly $343 million as of September 30. This position is a 64% jump from June, when the bank held 3.21 million shares.

JPMorgan also reported sizeable options activity tied to the ETF, with $68 million in IBIT call and $138 million in put positions. These holdings cover multiple divisions within the banking institution and are largely linked to its high-net-worth clients.

Balchunas also pointed out that Friday marked a new milestone in options activity for IBIT. He noted that a large number of investors are entering puts as a cushion to hold long positions in bitcoin, while offering protection from potential downside risk.

The increase in options trading volume signals that investors are trading bitcoin ETFs while creating organized risk management around them. This trend contributes to improved liquidity and enhances the products’ market position, helping boost bitcoin’s prospects as a digital equivalent of gold.

At the time of writing, Bitcoin (BTC) is trading at $83,914 – up 2.31% in 24 hours.