Cryptocurrency exchange Kraken has introduced an institutional division intending to seize opportunities presented by Bitcoin exchange-traded funds (ETFs).
The exchange has unveiled a specialized division tailored to cater to institutional clients. This strategic move comes as Kraken seeks to capture a portion of the market share within the burgeoning realm of Bitcoin exchange-traded funds (ETFs).
The announcement by Kraken was made on February 27, stating that its latest institutional division will integrate with its current institutional services, encompassing spot and over-the-counter trading, as well as crypto staking (excluding the United States).
The initiative targets asset managers, hedge funds, and wealthy individuals.
Tim Ogilvie, co-founder of Staked, who became part of Kraken after it acquired his company in December 2021, will lead Kraken Institutional. In a statement, Ogilvie noted that the institutional adoption of crypto is growing rapidly, and he emphasized that the recent approval of ETFs has fueled increased institutional interest in the crypto space.
A Bitcoin ETF (Exchange-Traded Fund) is an investment fund that allows investors to gain exposure to Bitcoin without buying or holding the cryptocurrency directly. It functions similarly to traditional ETFs, where shares represent underlying asset ownership.
It means that investors can trade Bitcoin through brokerage accounts, avoiding the complexities of owning and storing the digital currency themselves.
The United States Securities and Exchange Commission (SEC) approved the applications of eleven spot Bitcoin ETF filers earlier this year, and the market sentiment has improved dramatically since that announcement.
While we cannot entirely give credit to Bitcoin and the crypto market in general performance to these different firms whose spot Bitcoin ETFs are now listed on various exchanges, multiple factors work in tandem to affect the dynamics of the crypto market.
However, the approval has proved instrumental in playing its part in moving the crypto market in the forward direction, as Bitcoin’s market value has made substantial gains ever since these spot Bitcoin ETFs were approved.
The nine new spot Bitcoin ETFs have seen a combined inflow of $6 billion since it launched in January of 2024, making the average daily inflow $196 million.
It was reported that the trading volumes for the recently introduced nine spot Bitcoin ETFs reached a new daily high. On February 26, the combined trading volume for these ETFs exceeded $2.4 billion, breaking the previous record set on January 11.
These figures do not include Grayscale’s Bitcoin Trust (GBTC) trading volume. Among the ETFs, BlackRock’s IBIT led the pack with $1.29 billion in trading volume, followed by Fidelity’s FBTC with $576 million. ARK 21Shares (ARKB) and Bitwise (BITB) ETFs saw flows of $276 million and $81 million, respectively.
The performance of BlackRock’s IBIT was so impressive that it dominated the daily trading volume, accounting for over 50% of the total volume, surpassing its previous daily record by more than 30%.
What is also impressive about this update of spot Bitcoin ETFs showing strong performance is that it managed to counter the effect of Grayscale’s ETF, which has seen billions in outflows.
However, the other funds have managed to counter the effect of Grayscale’s massive sell-off, with BlackRock and Fidelity leading the way in bringing in high inflows.
Coinbase is the custodian for eight of the ten recently launched Bitcoin ETFs. This development has led some analysts to forecast substantial earnings for the company in the coming year.
With this trend in mind, Kraken is attempting to capitalize on this lucrative opportunity.
Kraken Institutional is set to introduce a qualified custody service supported by Kraken Financial, a Special Purpose Depository Institution based in Wyoming.
The move positions Kraken Institutional in direct competition with established players like Coinbase Institutional and Coinbase Prime, which emerged in 2021 to serve the needs of institutional investors.
Additionally, Kraken Institutional faces competition from Binance Institutional, launched in mid-2022, offering tailored solutions for various institutional users, including asset managers, brokers, hedge funds, and liquidity providers.
