Grayscale Bitcoin Trust Records $2.14 Billion in Outflows After ETF Approval
During the first week of trading as an ETF, Grayscale Bitcoin Trust witnessed a withdrawal of $2.14 billion (52k BTC) from investors.
Investors have withdrawn more than 52,000 in Bitcoin (BTC) equivalent to $2.14 billion from the Grayscale Bitcoin Trust, provided by the asset management company Grayscale, in the week following its initial days of trading as an ETF.
The fund, securing approval from the US Securities and Exchange Commission (SEC) to transform from a trust to an ETF, presently holds 566,973 BTC, valued at approximately $23.21 billion, according to Lookonchain data.
Grayscale outflows marked a significant contrast with the performance of the other nine spot Bitcoin ETFs, which have garnered a total inflow of nearly $3.8 billion.
In contrast, other spot Bitcoin ETFs have observed positive net inflows, with BlackRock’s iShares Bitcoin Spot ETF presently holding 33,431 BTC, which is equivalent to approximately $1.37 billion. Fidelity’s Bitcoin Spot ETF holds 24,857 BTC, translating to roughly $1.02 billion, while Bitwise’s Bitcoin Spot ETF has a holding of 10,152 BTC, equivalent to $415 million.
The Grayscale Bitcoin Trust ETF conversion allows gaining a clearer understanding of the actual flow of GBTC as the flow data instead provides a more comprehensive view of how the ETF performed following SEC approval.
Grayscale has been a prominent player in the regulated Bitcoin investment market for more than a decade. With the emergence of other issuers in the market, there is a natural shift observed towards these new products.
According to Zach Pandl, Grayscale’s managing director of research, the total net inflows into Bitcoin investment products are crucial for prices, emphasizing that the focus should be on overall inflows rather than substitution between different products.
However, the outflows from Grayscale’s ETF are not entirely surprising. Bloomberg Intelligence had predicted that the fund would experience outflows exceeding $1 billion in the weeks following the SEC approval with some investors may be shifting towards more affordable spot Bitcoin ETFs.
GBTC, with an expense ratio of 1.5%, stands as the costliest United States ETF directly investing in Bitcoin. In comparison, the VanEck Bitcoin Trust, the second-most expensive fund, charges a lower fee of 0.25%.
GBTC Outflows Affect Bitcoin Price
J.P. Morgan Managing Director Nikolaos Panigirtzoglou earlier shared insights into the price outlook for Bitcoin on LinkedIn, focusing on the implications of recent spot Bitcoin ETF launches and the outflows from Grayscale’s Bitcoin fund.
Panigirtzoglou highlighted that the Bitcoin price experienced a decline of more than 10% since the launch of spot Bitcoin ETFs. Although it has surged beyond $47,000 in anticipation of the spot bitcoin ETF approval, it quickly retreated afterwards, currently trading at $40,823 as of the time of writing.
“The significant outflow from Grayscale’s GBTC fund has contributed to this decline. Investors in GBTC, who bought the fund at a substantial discount to NAV over the past year to position for its eventual ETF conversion, are now exiting the bitcoin space entirely rather than transitioning to more cost-effective spot Bitcoin ETFs,” said Nikolaos Panigirtzoglou, Managing Director at J.P. Morgan.
He previously estimated that up to $3 billion was invested in GBTC in the secondary market in 2023, capitalizing on the discount to NAV. Considering the $2.14 billion already exited, there could be an additional sum exiting the Bitcoin space through profit-taking on GBTC. This potential additional outflow may exert pressure on Bitcoin prices in the upcoming weeks.
Grayscale outflows, following the SEC’s landmark approval, diverge from the positive trend seen in other spot Bitcoin ETFs. This possibly indicates investors’ quest for more profitable options while simultaneously impacting the current Bitcoin price.
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