Grayscale Bitcoin Exodus Continues Amid ETF Boom
Summary:
Grayscale, the world's largest digital asset manager, has witnessed a withdrawal of approximately 33% of its Bitcoin holdings on GBTC ever since becoming an ETF in mid-January. Despite an initial slowdown in late January and February, outflows have consistently continued. Market speculations about when the Bitcoin hemorrhage might stop are ongoing. Meanwhile, other Bitcoin ETFs are performing exceptionally well amidst the crypto rally, with Fidelity reaching a record inflow of $404.6 million and Bitwise's Bitcoin ETF (BITB) seeing high inflows as well.
Grayscale, the global leader in digital asset management, has seen almost one-third of its Bitcoin holdings on GBTC liquidated since its transformation into an ETF in mid-January. The ongoing exodus was observed for the 36th consecutive day on March 4, as 5,450 BTC, equivalent to $368 million, left the fund; this withdrawal marks a total outflow of around $9.26 billion since its conversion as per data from BitMEX Research. Prior to restructuring as an ETF, Grayscale held approximately 620,000 BTC as reported by Coinglass. Grayscale's transition to a spot Bitcoin ETF has provided investors the opportunity to redeem their shares for Bitcoin - a feature not permitted in the previous construct. Additionally, GBTC's higher expense ratio in comparison to rival ETFs such as BlackRock's IBIT and Fidelity’s FBTC was not in its favor. Currently, GBTC houses 420,682 BTC valued at roughly $28.8 billion, as featured on its website and portfolio information. With the ongoing hemorrhage of its Bitcoin reserves, market commentators speculate when the deflux will cease. Although GBTC experienced a slowdown in outflows in late January and February, sparking hopes of a halt, the situation intensified when insolvency courts permitted Genesis, a crypto lender, to liquidate nearly $1.3 billion worth of GBTC shares in an effort to compensate investors in February. Eric Balchunas, a Bloomberg ETF analyst, had previously hypothesized that these outflows would halt once 25% of GBTC's remaining shares had been liquidated. Nevertheless, nine out of ten spot Bitcoin ETFs have surpassed expectations amidst a crypto rally, recording a substantial trading volume of around $5.5 billion on March 4 according to Balchunas. Fidelity, marked a record with an inflow of $404.6 million, successfully mitigating GBTC's outflows. Bitwise's Bitcoin ETF (BITB) also had a robust day with incoming funds reaching $91 million, the highest since February 15.
Published At
3/5/2024 6:40:07 AM
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