Key Takeaways:
- Grayscale’s Bitcoin holdings in the GBTC fund have decreased by 33%, dropping from 620,000 BTC to approximately 420,680 BTC since its conversion to an ETF.
- The GBTC ETF has faced challenges, including higher fees compared to competitors, contributing to significant outflows totaling $9.26 billion.
- Market analysts speculate about when the outflow from GBTC might stabilize, with predictions ranging from after a 25% to 50% reduction in outstanding shares.
- Despite GBTC’s outflows, the broader market for Bitcoin ETFs has seen impressive growth, with nine new spot Bitcoin ETFs significantly outperforming expectations.
- Record trading volumes and inflows were reported for several Bitcoin ETFs, including BlackRock’s IBIT and Fidelity’s ETF, indicating strong market interest and the potential offset of GBTC’s outflows.
Grayscale, the world’s premier crypto asset manager, has experienced a significant reduction in its Bitcoin holdings within the GBTC fund, witnessing a 33% decrease since its transition to an ETF format. Initially, Grayscale’s GBTC fund boasted approximately 620,000 BTC, a figure that has since diminished to about 420,680 BTC.
This shift marks a substantial $9.26 billion outflow of assets from the fund, as tracked by BitMEX Research, highlighting 36 consecutive days of withdrawals amounting to 5,450 BTC, or roughly $368 million, just recently.
5,450 Bitcoin of GBTC outflow today
— BitMEX Research (@BitMEXResearch) March 4, 2024
Total GBTC outflow since 11th Jan 2024 is 202,874 Bitcoin
This is a decline in Bitcoin holdings by around 33% since ETF conversion https://t.co/2rdWsBd4j0
The transformation of the GBTC fund into an ETF was a pivotal moment for Grayscale, enabling investors the newfound ability to exchange their shares directly for Bitcoin, a feature absent in its prior structure. However, this transition has not been without its challenges.
Notably, the GBTC ETF has faced criticism for its relatively higher fees compared to competitors like BlackRock’s IBIT and Fidelity’s FBTC, potentially contributing to its declining Bitcoin cache.
Despite this, the GBTC fund’s current holdings are valued at an estimated $28.8 billion, based on the latest market prices. The situation has sparked widespread speculation among market observers regarding when the GBTC might halt its Bitcoin outflows, with some analysts suggesting a slowdown in late January and February.
Nevertheless, the outflow resumed with Genesis, a crypto lender, being authorized by bankruptcy courts to liquidate approximately $1.3 billion in GBTC shares as part of a reimbursement strategy for its investors.
Bloomberg’s ETF analyst, Eric Balchunas, had hypothesized that the outflow could cease once GBTC had depleted 25% of its outstanding shares. Yet, opinions vary widely, with a notable portion of the community predicting the stabilization could occur between the 35-50% depletion range.
In contrast, the broader market for Bitcoin ETFs has seen remarkable growth, with nine new spot Bitcoin ETFs outperforming expectations amid a sustained rally in Bitcoin’s price. These ETFs collectively reached a record trading volume of approximately $5.5 billion on March 4, with BlackRock’s IBIT fund alone accounting for $2.4 billion of that volume.
This surge in activity has seen the assets under management for the IBIT fund exceed $11 billion, with all new ETFs registering over a 30% increase in volume within just six days.
Confirmed: today was second biggest volume day for the Ten at about $5.5b. $IBIT alone did $2.4b of it and has crossed $11b in aum. Each of them is up over 30% in 6 days, which will prob help keep flow ball rolling. Getting a bit of ARK Mania deja vu. pic.twitter.com/BDRYVPBk34
— Eric Balchunas (@EricBalchunas) March 4, 2024
Furthermore, March 4 also set a new benchmark for Fidelity’s Bitcoin ETF inflows, with a record $404.6 million, effectively compensating for the outflow from GBTC on its own.
Record day for Fidelity today: US$404.6 million of inflow
— Farside Investors (@FarsideUK) March 5, 2024
Fidelity has more than offset the GBTC outflow on its own https://t.co/cr320pbObf pic.twitter.com/ellb4qUoNK
Similarly, the Bitwise Bitcoin ETF (BITB) enjoyed significant inflows, securing $91 million, its highest since February 15, further underscoring the dynamic and evolving landscape of Bitcoin investment vehicles.
About The Author
Efe Bravo, a seasoned journalist, delivers compelling insights into the cryptocurrency and blockchain industry.
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