Grayscale Bitcoin ETF Reaches Outflow Lows: Is This Good News? 

Key Takeaways

• Grayscale Bitcoin Trust (GBTC) continues experiencing outflows but has reached its lowest point.
• US Bitcoin ETFs are seeing a surge in activity as Bitcoin rally continues
• Predictions indicate a continued increase in ETF inflows in March

The Grayscale Bitcoin Trust (GBTC) has seen notable outflows since its January listing. Meanwhile, the other nine Bitcoin ETFs have experienced inflows since their debut.

With a Bitcoin price rally, some analysts predict that the Bitcoin ETF inflow will increase in March as per the current momentum.

Grayscale Bitcoin Trust Outflows Slow Down

The Grayscale Bitcoin Trust has only encountered negative fund flows since its fund conversion. However, the outflows have slowed down and reduced to $22 million by February 26.

The day also became the second most traded day for the entire ETF market with $3.2 billion, including GBTC. It was, however, the most traded day for the nine new funds, with $2.4 billion moved across the day, according to Bloomberg .

Data from the paper revealed $7.4 billion worth of outflows from GBTC over one month of trading. This trend is particularly important given that GBTC has not witnessed any inflows since its transition in mid-January, a move that was anticipated to rekindle investor interest.

Surge in Bitcoin ETF Activity

Contrastingly, the wider US Bitcoin ETF market has experienced a remarkable surge in activity. Analyst James Seyffart cites Cointucky Derby to update an inflow of over $580 million into US Bitcoin ETFs, signaling a positive investor appetite on a net basis.

 Seyffart noted: “Over $1 billion in gross inflows against $436 million in gross outflows for $GBTC.”

The new cohort of nine Bitcoin ETFs broke all previous volume records with a staggering $2.4 billion in trades, led by $IBIT’s $1.3 billion volume.

Future Market Predictions

As outflows slow down, analytics from Apollo indicate a continued upward trajectory for fund investments moving into March. Co-founder Thomas Fahrer expected a peak of 100,000 BTC in March. However, this optimism is tempered by projections of a subsequent slowdown due to increasing difficulty and rising prices of Bitcoin.

Factors Influencing GBTC’s Position

There are several factors to consider, regarding GBTC’s outflows and the success of other Bitcoin ETFs. Bloomberg cites GBTC’s higher management fee of 1.5%, compared to its peers’  sub-0.3% fees as one factor. Moreover, the liquidation of holdings by bankrupt entities, such as Genesis Global Holdco LLC, has adversely affected its appeal. Despite these challenges, GBTC’s outflows have begun to stabilize, which is good news for market recovery.

While GBTC faces hurdles in reclaiming its position, the investor base is suggesting a surge in activity. With predictions hinting at future fluctuations in Bitcoin inflows, Bitcoin prices and investor sentiments are in focus.

About the Author

Shraddha Sharma

Shraddha has around five years of experience as a financial journalist, focusing largely on the Asian markets. Starting her career in Mumbai, India, as a news trainee and producer, she quickly found her niche in crypto. She is keen on learning how emerging technologies affect the broader markets and enjoys explaining complex financial ideas in a way that's easy to understand.

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