Empire Newsletter: Not all ETFs buyers were created equal

It’s easy to lump all bitcoin ETFs together, but a few are coming out on top


Sasin Paraksa/Shutterstock modified by Blockworks


Beating bitcoin ain’t easy

Not all bitcoin ETF investors are built the same.

It’s been four months since nine spot bitcoin ETFs hit US markets, alongside the conversion of Grayscale’s Bitcoin Trust.

The temptation is to lump them all together — but some are doing better than others.

All the funds are operating as intended by tightly tracking bitcoin. But zooming into each fund shows significant variance in how their respective investor classes have performed.

Take Invesco-Galaxy’s BTCO. It has so far netted $286.8 million since Jan. 11, acquiring about 6,698 BTC. At current prices, BTCO’s bitcoin is worth $421 million — putting current shareholders almost 47% up on their collective investment to date.

Read more from our opinion section: BlackRock and other bitcoin ETFs rob bitcoin of its room to grow

Bitcoin, meanwhile, has rallied about 35% during that period. The same analysis of VanEck’s fund shows HODL shareholders are only barely above water, about 1% up on their net flows.

What’s making the difference? It turns out that Invesco-Galaxy’s BTCO bought the majority of its bitcoin in the first week and a half of the fund’s existence — when bitcoin was in the low $40,000s (current price: $62,500). 

A decent chunk of BTCO’s bitcoin was offloaded on the way up, as bitcoin marched to all-time highs in mid-March.

Overall, the fund bought low and sold high — demonstrating how the notion that bitcoin ETF buyers are almost exclusively long-term holders could very well be a meme.

The purple columns show bitcoin flows — notice how much came in in the earliest days

Compare that to VanEck’s HODL. Fund contributors steadily poured in dollars for weeks, with HODL buying about 91 BTC ($5.7 million) per trading day, on average.

Then, in the two days leading up to bitcoin’s all-time high of near $73,800 in March, HODL investors flooded the fund with more than $200 million. HODL was forced to buy 2,800 BTC at the top. An almost simultaneous reduction in fees surely didn’t help, either.

To make matters worse, HODL has ironically since seen negative flows on three separate days — the worst on May 1 saw 112.25 BTC ($6.5 million at the time) pulled overall, just as bitcoin hit lows around $58,000.

HODL bought the top and sold the local bottom

As a cohort, the nine bitcoin ETFs (sans GBTC) have net spent nearly $29.32 billion on 533,919 BTC, now worth $33.56 billion.

That puts those funds almost 15% ahead of their net flows to date.

— David Canellis

Data Center

  • ETH has now been inflationary for a month straight, on track to add $1.3 billion to the supply over the next year at current prices.
  • $158 million overall has been pulled from Arbitrum bridges in the past seven days, while $116 million has net flowed into bridges for rival Optimism.
  • Daily DEX volumes are at their lowest point since February: $2.71 billion yesterday compared to $15 billion highs in March.
  • BTC and ETH are doing their best to pare weekly losses, with BTC aiming to reclaim $63,000 as ETH eyes $3,000.
  • TON has flipped DOGE over the past week to take ninth place by market cap, and now closes in on Lido Staked ETH.

Forget the yen 

We’ve talked about Metaplanet before, specifically after the Japanese company announced that it would copy MicroStrategy’s bitcoin acquisition strategy.

On Monday, the company announced that it was making a “strategic treasury transformation” in the wake of the Japanese yen’s weakness. 

ICYMI: Earlier this month, the Bank of Japan had to intervene to prop up the yen after it hit lows not seen in over 30 years. 

This state of affairs led the company to adopt bitcoin as a treasury reserve asset. The firm plans to focus on buying bitcoin “instead of retaining the ever-weaker yen.”

Metaplanet could potentially use share issuances and other “strategic financial offerings” to buy up more bitcoin. “This approach is designed to be accretive on a bitcoin per share basis, underpinning shareholder value on a long term basis,” the firm said.

Mind you, this is a whole new ballpark for Metaplanet. 

According to my napkin math, as David would say, the firm owns around 117 BTC. Metaplanet bought 97.85 BTC, its first purchase, at the end of April, and then added 19 BTC a few days ago, meaning that the company has spent over $7 million.

(That’s a drop in the bucket for MicroStrategy, which bought over $800 million worth of bitcoin in a single purchase back in March.)

When Metaplanet first announced its bitcoin focus, I called it the MicroStrategy of Japan (with caveats, of course). But now I’m beginning to think that it could be more like a sibling of the MicroStrategy strategy. 

As Metaplanet points out in a white paper released today, focusing on bitcoin allows the firm to protect itself from further currency depreciation, and potentially show the use case of bitcoin in the context of a publicly traded company. 

While Saylor’s firm has seen huge success with its strategy, it has benefited from the bitcoin ETFs and overall bull run. The company hasn’t had to deal with currency issues, obviously, since it’s based in the US. 

It’ll take time — and far more bitcoin buying — but Metaplanet’s strategy shift demonstrates its willingness to adapt to an uncertain financial environment. 

It also shows an interesting way to do it: Turn to bitcoin.

— Katherine Ross

The Works

  • Crypto startups led by academics are drawing renewed interest from VCs, Bloomberg writes. 
  • House Financial Services Committee Chair Patrick McHenry, R-N.C., said a measure focused on crypto market regulation will receive a floor vote, according to CoinDesk. 
  • More than 1 million Pudgy Penguin plush toys have been sold in the past year, according to project CEO Luca Netz. 
  • Chinese and US government officials are set to begin talks on artificial intelligence in Geneva today, per the Washington Post. 
  • A phishing attack victim’s funds — some $71 million worth of WBTC — were returned by the attacker, according to X account Lookonchain. 

The Morning Riff

Sexual misconduct allegations have been raised against Neel Somani, the founder of Eclipse. He denied the claims and announced he was stepping back from being the “public face” of Eclipse. 

I bring this up not because I want to talk about the Somani allegations, but because I think that there’s an interesting discourse bubbling under all of this: Where’s the transparency?

Crypto is hailed for prioritizing transparency, and I think that partially bled into the aforementioned scenario as women spoke out on X about their alleged experiences with Somani.

But I think there’s still room for improvement. Haseeb Qureshi, managing partner at Dragonfly, said his firm passed on investing in Eclipse because they heard rumors about Somani’s alleged behavior. 

When asked if the firm said anything, Qureshi said they let “a couple folks” know about the rumors, and they also declined to invest. I agree with what Qureshi added, which is that it’s not okay to “put someone on public blast over rumors.”

Qureshi said his firm heard about the “longstanding pattern of behavior” with “minimal diligence.” If that’s the case, why did it take women posting on X for these rumors to go public?

That’s what I’ve spent the weekend mulling over, and I’m not sure there’s a clear or good answer.

But I pose this to you: If crypto wants to be transparent, and it wants to be different from places like Wall Street, then how can we balance more transparency without spreading baseless rumors? 

This isn’t just about the money or the technological promises — there are people’s lives to think about as well. They deserve to be informed and protected.

— Katherine Ross

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