VanEck’s Bitcoin exchange-traded fund (ETF), known as HODL, recently experienced a sudden and significant increase in trading volume, leaving experts puzzled about the cause. On February 20th, the fund saw a trading volume of $258 million, which was nearly 15 times higher than the previous day. This surge in volume was due to approximately 32,000 individual trades, which is 60 times more than the fund’s average. Interestingly, the spike did not come from a single large investor, which would have been expected. Senior Bloomberg ETF analyst Eric Balchunas, who shared this data, expressed his uncertainty about the reason behind this sudden increase. He speculated that perhaps a Reddit or TikTok influencer recommended the fund to their followers, considering the explosive rise in the number of trades. Balchunas described the situation as resembling a “retail army.”
In a move to attract investors, VanEck filed a notice with the United States Securities and Exchange Commission on February 15th, announcing a reduction in fees for its ETF. Starting from February 21st, the fees would be lowered from 0.25% to 0.20%, which is 5 basis points lower than the fees charged by market leaders BlackRock and Fidelity. BlackRock, the largest fund issuer, promised to waive fees on its iShares fund until it reached $5 billion in assets under management (AUM). However, after reaching that milestone on February 15th, they decided to charge 0.25% fees on all new investments into the fund.
WisdomTree’s Bitcoin Fund (WBTC) also experienced a surge in trading volumes. On February 20th, the fund witnessed a 1,200% increase in volume, reaching $154 million in total daily volume, according to Bloomberg data cited by Balchunas. The number of individual trades on WBTC also significantly rose to 23,000, compared to just 221 trades on the previous Friday.
It is worth noting that the increase in trading volume for both the HODL and WBTC funds occurred during a period of relatively high volume for leading funds, including BlackRock’s iShares Bitcoin ETF. Currently, VanEck’s Bitcoin Trust is the seventh-largest spot Bitcoin ETF, with $191.9 million in AUM, while WisdomTree’s fund is the smallest, with $29.4 million in AUM, according to data from Dune Analytics.
Overall, this sudden surge in trading volume for Bitcoin ETFs has left experts intrigued, as they continue to search for the underlying cause.