Monochrome Digest | February 2024 - March 2024


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Bitcoin ETFs in U.S. hit record volume of USD$7.6B in one day


In the past month, U.S. spot bitcoin exchange-traded funds (ETFs) have experienced a notable surge in investor interest and activity. According to recent data, U.S. Bitcoin ETFs had a record-breaking USD$7 billion in trading volume on 28 February, breaking the record of USD$4.5 billion volume on their first day of trading. According to BitMex, BlackRock’s iShares Bitcoin Trust (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC) dominated the segment, with 28 February’s net inflows totalling USD$612 million and USD$245 million, respectively.

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In addition to inflows and trading volume, U.S. spot Bitcoin ETFs have seen a notable accumulation of over 300,000 bitcoin across the 9 spot bitcoin ETFs, making up around 1.5% of Bitcoin’s total supply of 21 million BTC. Currently, an estimated 900 new BTC is added to the daily supply by miners. In contrast, spot Bitcoin ETFs are seeing net inflows of nearly 8,000-9,000 BTC on each trading day, reducing the supply further as demand continues to grow.

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Microstrategy acquires 3,000 BTC

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Microstrategy, a business analytics firm and largest corporate owner of bitcoin, witnessed a significant surge in its stock price, climbing by 24% to top USD$1,300 for the first time in 24 years. The increase follows the company’s announcement of its acquisition of 3,000 bitcoin, further bolstering its already substantial bitcoin holdings.

The purchase of 3,000 bitcoin amounts to an estimated USD$155.4 million purchased from 15 February to 25 February, averaging USD$51,813 per bitcoin according to an SEC filing. This acquisition brings the firm’s total bitcoin holdings to about 193,000 bitcoin, valued at over USD$10 billion.

CEO Michael Saylor has been at the forefront of advocating for Bitcoin as a treasury reserve asset, leading the company's strategy to accumulate large amounts of the cryptocurrency. In MicroStrategy's post-earnings call with analysts in early February, CEO Michael Saylor believed 2024 is the "year of birth" of bitcoin as an institutional-grade asset class.

"And so we've now completed the first 15 years of the bitcoin lifecycle. And in that first 15 years, it was largely [an] unregulated retail asset, misunderstood," Saylor said, according to a FactSet transcript. "The next 15 years, I would expect, will be a regulated institutional, high-growth period of bitcoin."

Wealth Managers Expand Access to Spot Bitcoin ETFs in the U.S.

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Following the approval of spot bitcoin ETFs in January and record trading volumes the past few months, institutional interest and appetite for bitcoin has increased, causing a rising trend among wealth management firms and registered investor advisor (RIA) networks in the U.S. towards offering access to spot Bitcoin ETFs for investors.

The Carson Group, with an investment advisory firm based in Omaha, Nebraska which handles USD$30 billion in assets, approved four spot Bitcoin ETFs (iShares Bitcoin Trust ETF, Fidelity Wise Origin Bitcoin ETF, Bitwise Bitcoin ETF and the Franklin Bitcoin ETF) for use by the firm’s advisors, aiming to provide clients with regulated exposure to the crypto-asset market. Two Wall Street wealth management giants, Bank of America’s Merrill Lynch and Wells Fargo, are adding spot bitcoin ETFs to their brokerage platforms and have begun offering them to some of their wealth management clients.

Additionally, Morgan Stanley, a prominent player in the alternative investments and private market sector with assets under management exceeding USD$150 million, has been conducting due diligence to add spot bitcoin ETF products to its brokerage platform. As one of the first major U.S. banks to provide its high-net-worth clients access to bitcoin funds in 2021, the bank affirmed its initiative to offer exposure to bitcoin to its wealth management clientele through a duo of external cryptocurrency funds during its first-quarter earnings call in April 2021.

Analysts and industry executives have said they expect another wave of flows as more RIA networks and broker-dealer platforms allow their clients to allocate to the ETFs. Despite growing interest in Bitcoin ETFs, some advisors are cautious about the risks associated with investing in cryptocurrencies. Concerns over volatility and regulatory uncertainty have led some advisors to limit access to spot Bitcoin ETFs for their clients. Nonetheless, the increasing availability of Bitcoin ETFs through reputable financial institutions marks a significant milestone in the mainstream adoption of cryptocurrencies.

The content, presentations and discussion topics covered in this material are intended for licensed financial advisers and institutional clients only and are not intended for use by retail clients. No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented. Except for any liability which cannot be excluded, Monochrome, its directors, officers, employees and agents disclaim all liability for any error or inaccuracy in this material or any loss or damage suffered by any person as a consequence of relying upon it. Monochrome advises that the views expressed in this material are not necessarily those of Monochrome or of any organisation Monochrome is associated with. Monochrome does not purport to provide legal or other expert advice in this material and if any such advice is required, you should obtain the services of a suitably qualified professional.

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