Bitcoin ETFs Rise as Grayscale's GBTC's Market Dominance Wanes
Summary:
Bitcoin's trade value fluctuated between $42,580 and $43,422 on February 2, in parallel with the suspension of Grayscale's GBTC dominance over the Bitcoin exchange-traded fund market. Grayscale's high fees have led to a loss of over $5.8 billion in assets since January 11. However, GBTC's dominance has recently started to decline. Notably, the FTX crypto exchange sold its entire GBTC shareholding, valued at around $1 billion. As a result, lesser trading volumes below $1 billion were recorded for the first time since Bitcoin's ETF groups launched.
On February 2, Bitcoin (BTC) experienced a fluctuation in its trade value, varying from $42,580 to $43,422. This coincided with a cessation in the dominance of Grayscale's GBTC over the Bitcoin ETF market. Until recently, GBTC ETF, which was converted from Grayscale, held the majority in daily spot Bitcoin ETF trading volumes, commencing January 11. However, this supremacy ended on February 1, when the ETFs of BlackRock's IBIT and ProShares' BITO overtook GBTC's transaction volume for the first time among the nine ETFs.
Analysts reported that IBIT held a volume of $301 million trades, with BITO slightly behind, closing the day with a transaction value of $298 million. GBTC dropped to third place, with a total of $292 million in trades, marking the first instance when GBTC's daily trading volume was surpassed by other ETFs. The total daily transactions of these ETFs on February 1 was somewhat underwhelming, totaling $924 million. This was the first time the cumulative daily transaction of these groups fell below the $1 billion mark since their inception.
When considering the overall trading since the launch of these ETFs that has reached $28.30 billion, the dip in trades on this particular day was notable. As of February 2, GBTC made a comeback, regaining the top position in daily trades, with a total of $240.68 million trading volume.
Since the beginning of their trading, GBTC was leading due to strong investor outflows, which was made possible when the trust was converted to a spot ETF. This consequently enabled investors to redeem their investments, a process that was previously impossible. Coupled with high fees, Grayscale lost over $5.8 billion in assets since January 11. However, a decline in GBTC's dominance has been observed over the recent few days, with an average of $700 million in BTC being dispatched to the Coinbase cryptocurrency exchange. This number has decreased to a total of less than $300 million since January 26. Outflows decreased further to 4,461 BTC on January 30, and to 4,433 BTC on February 2. Analysts suggest that this decrease in GBTC outflows could be attributed to profit-taking and may alleviate pressure on the price of BTC. A notable event in this saga was the sale of FTX cryptocurrency exchange's entire GBTC shares, valued at roughly $1 billion.
Published At
2/3/2024 12:45:00 AM
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