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The Grayscale Bitcoin Trust (GBTC) Outflows and Its Impact
The Grayscale Bitcoin Trust (GBTC), the world’s largest Bitcoin exchange-traded fund (ETF), has seen continued outflows for an entire month. According to Bloomberg data, GBTC witnessed $7.4 billion exiting the fund across 31 consecutive trading days as of Monday. This stands in stark contrast to the other nine newly launched spot Bitcoin ETFs, which have all experienced net inflows since their inception.
Factors Contributing to GBTC Outflows
Several factors have contributed to Grayscale’s continued outflows. While GBTC remains the largest and most actively traded Bitcoin ETF, its 1.5% management fee makes it the most expensive offering in the market. In contrast, the majority of its competitors charge less than 0.3%. Additionally, bankrupt estates, including Genesis Global Holdco LLC, have sought to offload their GBTC holdings. Even considering these factors, the consistency of GBTC’s outflows surprises industry observers. Vident Asset Management highlighted that while outflows were expected due to long-term holders waiting for the fund’s conversion, the duration and consistency of the outflows are noteworthy. “Does it go to 60 days? I don’t think so, but then again, I’m surprised to see it got to thirty,” Amrita Nandakumar, President of Vident Asset Management, said.
Recent Trends and Comparison
It is worth noting that outflows have slowed in recent days, with only $22 million leaving the fund on Monday compared to the peak of $640 million in January. Still, GBTC’s year-to-date outflow of $7.4 billion ranks as the second-largest among over 3,400 US-listed ETFs.
Spot Bitcoin ETFs Inflows vs. GBTC Outflows
While GBTC experiences outflows, the other nine spot Bitcoin ETFs launched in January are attracting billions of dollars amid the cryptocurrency’s rally. Industry giants like BlackRock and Fidelity lead the pack, amassing approximately $6 billion and $4 billion, respectively, followed by Ark Invest and Bitwise. Earlier this week, daily spot Bitcoin ETF trading volume amounted to nearly $2 billion, the highest level since the first day of trading on January 11. Spot Bitcoin ETFs witnessed a substantial influx of approximately $2.3 billion last week, nearly doubling the previous week’s inflow of $1.2 billion.
Impact on Gold ETFs
It is worth noting that there has been a net outflow from Gold ETFs, possibly driven by global investors’ growing demand for U.S. equity. So far this year, the leading 14 Gold ETFs have experienced outflows of $2.4 billion in 2024 as of February 14.
Investor Loyalty to GBTC
However, GBTC still enjoys a loyal following among cryptocurrency enthusiasts due to its triumph over regulatory hurdles. Nandakumar suggested that investors with brand loyalty to Grayscale, appreciating their stance against the SEC, may overlook GBTC’s relatively high fee. Year-to-date, GBTC’s share price has surged by 40%, outperforming Bitcoin’s approximately 34% increase. On Tuesday, Bitcoin surpassed $57,000 for the first time since late 2021, demonstrating the ongoing strength of the largest digital currency.