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Grayscale’s GBTC Dominance Shrinks by 50% in Two Weeks as Bitcoin ETFs Gain Traction

Last Updated January 29, 2024 2:22 PM
Teuta Franjkovic
Last Updated January 29, 2024 2:22 PM

Key Takeaways

  • Grayscale’s GBTC has seen significant capital outflows since it transitioned to an ETF.
  • Other Bitcoin spot ETFs have been attracting inflows, with Fidelity’s FBTC and BlackRock’s IBIT leading the pack.
  • The outflow of funds from GBTC has put downward pressure on Bitcoin prices, but the market is recovering.

As of January 26, the SEC-approved 10 Bitcoin spot ETFs have seen 11 trading days.

According to data from SoSo Value , the cumulative transaction volume during this timeframe amounted to $1.67 billion, with a total net asset value of $26.74 billion.

Grayscale’s GBTC Records Net Outflow

Grayscale’s GBTC continues to register negative values , signifying a “net outflow.” On the last trading day of the previous week, January 26, GBTC recorded a single-day net outflow of $255 million, marking its smallest outflow since its initial trading day.

As of January 26, GBTC has witnessed a cumulative outflow of $5.041 billion over 11 trading days according to Coinlive. In contrast, the other nine Bitcoin ETFs all reported net inflows on January 26. Fidelity’s FBTC led the pack with a substantial net inflow of approximately $100 million , followed closely by BlackRock’s IBIT , which reported a net inflow of $87.13 million.

Throughout the brief historical trading days of these two companies’ Bitcoin ETF products, the competition for the top spot in single-day net inflows has been a prominent trend.

Grayscale GBTC Witnesses Capital Outflow, Impacting BTC Prices

Analysts  attribute the substantial outflow of funds from Grayscale GBTC to various factors. Firstly, the transition from Bitcoin Trust to Bitcoin ETF prompted early investors to redeem arbitrage opportunities. Furthermore, GBTC’s management fees, higher than those of comparable products in the market, likely incentivized early investors to change their positions, resulting in capital outflows. Consequently, Grayscale found itself selling the Bitcoins it manages to fulfill redemption requests.

This period of continuous capital outflow from Grayscale GBTC exerted selling pressure on the BTC spot market, causing the BTC price  to dip below $40,000 momentarily. However, as the net outflow from GBTC gradually slowed down, BTC prices made a recovery, with BTC passing the $42,000 mark on January 29.

GBTC’s Net Outflow Slows, BTC Surges to $42,000

Since the launch of various Bitcoin spot ETFs on the US market on January 11, these products have collectively attracted a substantial $26.74 billion in investments over 11 trading days. However, on its inaugural trading day, January 11, GBTC recorded an outflow of $95 million, marking the smallest capital outflow of any day. Since then, GBTC has consistently witnessed daily outflows in the hundreds of millions. On January 22, GBTC experienced a single-day capital outflow exceeding $640 million, establishing a record for the largest single-day capital outflow thus far.

GBTC net outflow
Credit: SoSo Value

The crypto asset market is closely monitoring the volume of Bitcoins being sold by Grayscale as funds continue to flow out of GBTC. According to the current rules governing this ETF attribute product, when an investor requests redemption or sale of GBTC, Grayscale is obligated  to sell an equivalent amount of Bitcoin to facilitate the investor’s redemption.

Data from Lookonchain as of January 23 reveals that on January 11, Grayscale sold  over 2,000 Bitcoins. In the subsequent trading days of the Bitcoin ETF, Grayscale’s daily sales volume exceeded 10,000 coins, even reaching as high as 14,000 coins on two occasions.

BTC value
Credit: LookOnChain

Nevertheless, despite experiencing significant capital outflows since its transition to an ETF, Grayscale GBTC has been stabilizing as the outflow slows down. This trend suggests that the Bitcoin ETF market is maturing and that investors are increasingly seeking access to Bitcoin through these regulated products.

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