Outflows from Grayscale’s Bitcoin Trust (GBTC) appear to be slowing, as evidenced by Bitcoin ETF trading activity. This comes at a time when investor concerns about Grayscale’s Spot ETF appear to be finally subsiding, with the entire ETF cohort continuing to attract massive trading volumes and rapid growth in assets under management. As a result, the GBTC saw daily outflows steadily decline over the course of the week to just $44.2 million on Friday, the lowest since spot Bitcoin ETFs went live.
Outflows decrease as Grayscale’s BTC ETF stabilizes
After a few weeks of increased outflow With a total of more than $7.44 billion, investors withdrew just $436.2 million from Grayscale’s Bitcoin Trust last week. Notably, the lowest daily outflow of $44.2 million occurred on the last day of the week.
Grayscale’s GBTC is undoubtedly the largest Bitcoin ETF in its cohort. This is because GBTC was launched in 2013 as a Bitcoin trust only available on OTC markets, which allowed it to grow over the years as it was the only choice for investors looking to delve into the crypto industry.
However, after a lengthy regulatory process, the SEC finally approved the conversion of GBTC to a Spot Bitcoin ETF. As a result, Grayscale’s new Bitcoin ETF went live on January 11, along with nine other recently approved ETFs.
GBTC owned approximately $27 billion worth of BTC assets when it first started trading as an exchange-traded fund (ETF). Surprisingly, Grayscale’s conversion to an ETF came at a huge cost investor withdrawalsand through the the end of JanuaryGBTC had witnessed withdrawals worth $5.55 billion.
Many analysts have attributed Grayscale’s high management fees (1.5%) to the outflow. During this period, other Bitcoin ETFs continued to attract new money. BlackRock’s iShares Bitcoin Trust (IBIT) now has over $6.64 billion worth of BTC in its ETF, followed by Fidelity Wise Origin Bitcoin Fund (FBTC) with $4.73 billion.
What’s next for Grayscale’s Bitcoin ETF?
While last week’s outflow data a encouraging sign for Grayscale and the broader ETF market, outflows could continue in the coming weeks. Bankrupt crypto lending company Genesis recently received court approval sell its $1.3 billion valuation of GBTC to repay its creditors.
The prospect of a liquidation of such severity has raised concerns among investors about the potential downside impact on BTC’s price. Many others, however, remain optimistic. According to a report by crypto exchange Coinbase, full liquidation would have a neutral impact on the market, as the majority of funds are expected to remain in the crypto ecosystem.
At the time of writing, Bitcoin was trading at $51,300, while Grayscale’s GBTC now had $22.7 billion in assets under management.
BTC price at $51,200 | Source: BTCUSD on Tradingview.com
Featured image of Vegavid Technology, chart from Tradingview.com
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