VanEck’s Bitcoin ETF Volume Surge Linked to High-Frequency Trading

• HODL witnessed $400M in trading volume, a gain of almost 1,400%.
• The fund had achieved $25.5 million in trading volume on its opening day last month.

Some market observers were caught off guard last week by the sudden explosion in daily activity of VanEck’s spot bitcoin ETF. The relatively new investment product recorded more than $400 million in trading volume, a gain of almost 1,400% compared to the second most active day of the exchange-trade fund.

HODL, VanEck’s exchange-traded fund, had daily trading volumes of less than $10 million prior to the $400 million increase on Feb. 20. The fund had achieved $25.5 million in trading volume on its opening day last month. In the last seven days, HODL has received $17 million in positive inflows, as reported by CoinShares.

High Frequency Intraday Trades

Based on the ETF’s modest weekly contribution of $17 million, what could have possibly caused trading volume in the hundreds of millions of dollars, is the big question.

CoinShares’s Head of Research James Butterfill stated:

“We have noticed a few of the ETFs have experienced this in Europe too. We suspect there are some quant funds executing high-frequency intraday trades. Adding that “some ETFs get used for high frequency trades, but it is typically futures that are used.”

Institutional investors, hedge funds, and investment banks engage in high-frequency trading when they make a large number of deals very quickly using computers and algorithms. As per collated statistics from Yahoo Finance, since spot bitcoin ETFs started trading last month, their cumulative trading volume has been approximately $52 billion. According to CoinShares, the products have generated a total of $5.8 billion since their introduction.

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