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Weekly: ETFs’ Record Debut

US spot bitcoin ETFs have seen tremendous net inflows in their first month and the total crypto market capitalization recovers to $2T

February 15, 2024

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Key takeaways

  • US spot bitcoin ETFs have seen tremendous net inflows in their first month since launch, totaling an impressive US$3.3B
  • We believe bitcoin should remain well-supported in the next 3-6 months, as more institutional players adjust to the new ETF reality
  • Ethereum’s technical onchain progress also dovetails with the structural market change that a spot ether ETF could represent

Written by

  • David Duong, CFA - Head of Institutional Research
  • David Han, Institutional Research Analyst

Market View

US spot bitcoin ETFs have seen tremendous net inflows in their first month since launch, totaling an impressive US$3.3B (over $4.2B year-to-date). This has pushed their total assets under management to around $36.8B. In comparison, the median expectation from our survey of institutional participants prior to the ETF approvals was closer to $1B in inflows.

This momentum has helped the total crypto market capitalization recover to $2T, last seen in March 2022. We believe bitcoin in particular (and crypto more generally) should remain well-supported in the next 3-6 months, as more institutional players adjust to the new ETF reality alongside the ongoing global narrative of monetary reflation. That said, there are some negative seasonal factors in March that may serve to unsettle that path.

Looking more broadly at the ETF landscape, the net inflows for bitcoin ETFs even surpassed those attracted by State Street's SPDR Gold Shares ETF (GLD) in its first month - historically, one of the most successful ETF launches on record. GLD brought in $1.8B in inflation-adjusted dollars between October 18 and November 18, 2004. In fact, Bloomberg puts BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) “among the top 0.1% when it comes to new ETF launches out of the about 5,500 that took place over the past 30 years.”

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Although the rebalancing flows (out of certain funds into others) have started to settle down, there are a few sources of technical selling pressure that are still in the pipeline. On February 14, Genesis Global Holdco LLC received permission from the United States Bankruptcy Court in the Southern District of New York to repay creditors based on its holdings of:

  • 35.9M shares ($1.66B as of February 15) of Grayscale Bitcoin Trust (GBTC)
  • 8.7M shares ($209M) of Grayscale Ethereum Trust (ETHE) and
  • 3.0M shares ($38M) of Grayscale Ethereum Classic Trust (ETCG).

The ruling allows Genesis to either (1) convert shares of these funds into their underlying BTC, ETH or ETC on behalf of creditors (for example, by selling GBTC and buying BTC) or (2) sell the shares outright and distribute the cash. Note too that the confirmation hearing for Genesis’ chapter 11 bankruptcy plan is scheduled for February 26 (9:30am ET), where the court will approve, reject or defer the decision on the debt repayment plan. It’s not yet clear how much the additional GBTC outflows could go into other US spot bitcoin ETFs, if not otherwise used to purchase bitcoin directly to repay creditors. Our view is that much of these funds will likely remain within the crypto ecosystem, contributing to a neutral overall effect in the market.

Ethereum Ecosystem Excitement

Meanwhile, open interest on both CME bitcoin and ether futures have recovered over the last six business days, with the former setting a new all time high of $6.3B (see Chart 1). The revived institutional interest isn’t surprising given crypto’s recent strong performance and with CME bitcoin futures basis trading closer to 16% (30d annualized). That said, we think there is room for open interest on ether to increase relative to bitcoin given a number of major Ethereum catalysts that could occur over the next several months, including a potential spot ETF approval in the US, as we discussed in our most recent monthly outlook

Recently, Franklin Templeton also filed for a spot ether ETF (making it the eighth applicant), and Ark 21Shares has amended their filing to include language to enable staking. Given the strong inflows into spot bitcoin ETFs, we expect more issuers to turn their attention to the second largest cryptocurrency over the next few months. Market players are watching to see if the SEC begins to actively engage with issuer applications, as that could affect their perceived odds of approval. 

Screenshot 2024-02-16 at 6.40.06 AM

Ethereum’s technical onchain progress also dovetails with the structural market change that a spot ether ETF could represent. First, the Geth client majority risk has largely been mitigated with updated measurements showing that less than 50% of clients currently run the software, down from its former 85% supermajority. This quick turnaround follows separate issues earlier in January that took Ethereum’s Besu and Nethermind clients temporarily offline and raised concerns around Geth centralization risks. Ethereum’s client diversity underpins its stability and speaks to the maturity of the network compared to other smart contract platforms. 

The network continues to make other technical improvements as well – albeit with some delays. The Dencun upgrade (initially expected in 4Q23) is now scheduled for March 13, 2024. The successful upgrade and adoption of Proto-Danksharding will introduce blob storage and serve to further strengthen the feasibility of Ethereum’s long-term rollup scalability roadmap, in our view. With an increasing number of data availability solutions (like Celestia and EigenDA) also providing alternative solutions for rollup data posting, we believe that the costs of rollups are likely to decrease by an order of magnitude throughout 2024.

Finally, we think ether’s role as a reward-generating, proof-of-stake asset will become increasingly important. Ether continues to be net deflationary from its EIP-1559 burn mechanism, seeing an annualized 0.5% deflation rate in the past seven days with overall supply having declined 0.3% since the Merge. At the same time, validators have staked about 25% (~30M ETH) of the total ether supply – in line with our expectations published a year ago. This is more than double the amount staked during the Merge in September 2022. 

Spilling the tea on (re)staking

In our view, protocols centered around staking – and more recently restaking – are poised to usher in a “DeFi renaissance” of sorts centered around real yields. EigenLayer, the primary restaking project on Ethereum that enables the rehypothecation of staked ether to secure other services, saw its total value locked (TVL) increase from $1.1B to $4.3B YTD after temporarily lifting deposit caps. This is more than the aggregated TVL of Uniswap and Compound across all chains, and is approaching that of the largest protocols by TVL, Aave and Maker.

The interest in restaking protocols has likely been the driver behind the recent increase in staked ETH, which has materialized in a validator entry queue that has not emptied out since the end of January (see Chart 2). 

Note that EigenLayer has not yet launched any actively validated services (AVSs) on mainnet at this time. Secondary protocols built on top of EigenLayer offering liquid restaking tokens or other onchain exotic products have also seen tremendous TVL growth. We believe that a successful restaking ecosystem with attractive additional yield could be an underappreciated anchor for ether liquidity. Although EigenLayer’s exact mainnet launch date has not yet been confirmed, its anticipated 2Q24 launch may augment interest in ether around the same time as the ether ETF approval deadlines (likely late May). 

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Crypto & Traditional Overview

(as of 4pm EDT, Feb 15)



Mkt Cap

24 hour change

7 day change

BTC correlation













Gold (Spot)






S&P 500


















Coinbase Exchange & CES Insights

Prices continued to march higher this week. A lack of large liquidations suggests the absence of outsized levered short positions in the market, a flow dynamic that broadly aligns with client sentiment. It is very hard to find anyone with a bearish view. Crypto native funds continue to bid up altcoins while more traditional market players add to BTC positions. While ETH performed well this week, flows in that token remained balanced.

Trading volumes on Coinbase platform (USD)

Screenshot 2024-02-16 at 7.03.18 AM

Trading volumes on Coinbase platform by asset

Screenshot 2024-02-16 at 7.03.12 AM

Financing Rates







5.00% - 10.75%


USD - 1m


5.25% - 11.00%

USD - 6m


5.50% - 11.50%


1.50% - 5.00%


3.00% - 8.00%


Notable Crypto News


  • Genesis Cleared to Sell GBTC Shares Worth $1.3 Billion (Bloomberg)
  • Bitcoin spot ETF net inflows now total over $4 billion since launch, Coinshares analyst says (The Block)
  • Bitcoin ETFs are sucking up 10X more BTC than miners can produce (Cointelegraph)


  • Binance founder Changpeng Zhao’s sentencing postponed to April (The Block)


  • Starknet Foundation unveils STRK token distribution plan to nearly 1.3 million eligible wallets (The Block)


Views From Around the World


Crypto Finance, owned by Deutsche Börse, has obtained four licenses from the German Federal Financial Supervisory Authority, enhancing its ability to offer regulated digital asset services in Germany as Deutsche Börse plans to introduce an institutional cryptocurrency exchange. (CoinTelegraph)

Telefonica, a Spanish telecommunications giant, has partnered with Chainlink Labs to use web3 technology for enhancing security measures against SIM card fraud, utilizing the SIM SWAP API to provide additional protection for blockchain transactions. (The Block)


The Ethiopian government has partnered with a Hong Kong-based data center operator to engage in Bitcoin mining, as part of a $250-million initiative to create advanced infrastructure for data mining and AI training in Ethiopia. (CoinTelegraph)

Japan's financial regulator has proposed measures to banks aimed at enhancing protection against fraudulent transactions involving crypto assets. (CoinTelegraph)

Com2uS, a South Korean game publisher, is partnering with the Oasys blockchain to develop web3 games and expand into the Japanese market, planning to introduce popular game franchises like Summoners War: Chronicle on the blockchain network. (The Block)

South Korea's Financial Intelligence Unit is set to enhance its oversight of crypto exchanges, aiming to remove those deemed unsuitable from the market starting in 2024. (CoinTelegraph

The Week Ahead

Feb 19 

Feb 20

Feb 21

Feb 22

Feb 23

Notable Macro

US FOMC Meeting Minutes

Notable Earnings

Walmart Inc.


Berkshire Hathaway Inc.


AVAX unlock (9.5M tokens)

US BTC & ETH Futures Expiration


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