Grayscale's Bitcoin Spot ETF Loses $1.1 Billion Amid Discount Slump; ARK Invest Accumulates Bitcoin
Summary:
Grayscale's Bitcoin (BTC) spot exchange-traded fund (ETF) has seen withdrawals of around $1.1 billion over three trading days due to a slump in its discount rate. The conversion of the Grayscale Bitcoin Trust (GBTC) into a spot ETF and the decrease in discount to as low as 1.55% have triggered the mass investor exit. Additionally, Cathie Wood's ARK Invest began accumulating its ARK 21Shares Bitcoin ETF while selling its other tech-related ETF shares. Despite sales by Coinbase and GBTC, Bitcoin's price remains robust at $43K.
In the past three trading days, approximately $1.1 billion has been withdrawn from Grayscale’s Bitcoin (BTC) spot exchange-traded fund (ETF), as the fund's discount shrunk to its lowest point in almost three years, prompting a flurry of investor exits. The third trading day on Jan. 16 alone saw an estimated $594 million extracted, says a Jan.16 Twitter post by Bloomberg ETF analyst James Seyffart. Seyffart noted recent Bitcoin ETF inflows but was uncertain if they exceeded the outflows from Grayscale's Bitcoin Trust (GBTC) on Jan.16.
The complexities of accounting and settlement processes when dealing with share trading may result in discrepancies in flow calculations, analysts, including Seyffart, cautioned. For a number of years, GBTC was a lucrative venture for investors who borrowed to gain entry, then skimmed profits from the Grayscale premium which reached a record 43% in July 2019, as per YCharts data. However, this beneficial arbitrage disappeared abruptly in February 2021 when the premium turned into a discount. The mandatory six-month waiting period before GBTC shareholders could sell trapped many, unwilling to unload their shares at increasingly lower prices. The GBTC discount plunged to a record low of 48.9% in December 2022 says YCharts. With the conversion of GBTC into a spot ETF, the discount fell even further, to just 1.55%, prompting investors, locked in for long periods, to finally exit.
The estimated $1.17 billion exodus from GBTC is equivalent to around 27,000 Bitcoin, given the current rate of about $42,800 per Bitcoin. Ten Bitcoin ETF issuers hold a total of 35,761 Bitcoin, excluding Grayscale's holdings. In addition to Grayscale's 605,891 Bitcoin, BlackRock's and Fidelity's ETFs reportedly hold 11,439 and 9,750 Bitcoin, respectively, as per data from CC15Capital. However, the exact Bitcoin holdings of each ETF issuer could vary.
In other news, ARK Invest, owned by Cathie Wood, has started accumulating in its recent approval, the ARK 21Shares Bitcoin ETF (ARKB), while selling its stake in the ProShares Bitcoin Strategy ETF (BITO) as well as a few other tech-focused shares in its ARK Next Generation Internet ETF. The ARKB now has 2,535 Bitcoin, over $109 million in value, making it the fifth biggest Bitcoin holder among the ten Bitcoin ETF issuers.
Despite Coinbase and GBTC sales, the price of Bitcoin shows strength at $43K. Concerns arise about a world where Bitcoin climbs to $1M: Hall of Flame.
Published At
1/17/2024 9:20:51 AM
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