Grayscale Investments' Bitcoin Holdings Drop 50% Ahead of Bitcoin Halving Event
Summary:
Grayscale Investments saw its Bitcoin holdings in its ETF (GBTC) decrease by 50% amid the upcoming Bitcoin halving event. This drop was largely attributed to high trading fees, leading to significant outflows. Despite this, the firm's rival, BlackRock's iShares Bitcoin Trust (IBIT), witnessed substantial inflow with holdings surging by more than 10,000%.
Grayscale Investments, a dominant Bitcoin (BTC) investor, experienced a 50% decrease in its BTC exchange-traded fund (ETF) holdings in anticipation of the upcoming Bitcoin halving event. The Grayscale Bitcoin Trust ETF (GBTC)'s Bitcoin holdings underwent a reduction by half from 619,220 BTC to 309,871 BTC over the 66 days trading period from January 11 to April 16. The current value of the holdings is $19.7 billion, based on the GBTC data.
Interestingly, the GBTC “halving” took place just two days ahead of the much-anticipated Bitcoin halving, a seminal event set to cut the mining reward by half from 6.25 BTC to 3.125 BTC. The Bitcoin halving occurs every four years or every 210,000 blocks and typically triggers subsequent crypto market rallies, although it is not related to the GBTC's halving.
Since its trading debut, GBTC has seen a sharp sell-off affecting the Bitcoin price. Excessive trading fees have been largely blamed for the mass outflows. Of the 10 spot Bitcoin ETFs in the United States, GBTC had the highest fees - 1.5% at the start of trading. In a bid to enhance competitiveness, most Bitcoin ETFs have reduced their fees to a range between 0.2% and 0.4%.
BlackRock's iShares Bitcoin Trust (IBIT), GBTC's main competitor, imposed a 0.25% fee at the inception of trading, exclusive of a 0.12% waiver for the initial $5 billion of traded assets. The BlackRock's Bitcoin ETF drew significant inflow, leading to an over 10,000% hike from a mere 2,621 BTC at the start of trading to 272,548 BTC by April 16. Currently, BlackRock's IBIT is just 13% away from GBTC's holdings.
Despite its explosive growth, IBIT hasn't been able to counterbalance GBTC's outflow of 309,349 BTC. Nevertheless, other providers of spot Bitcoin ETFs, totaling eight, have collectively amassed approximately 224,552 BTC, apart from GBTC, since trading commenced. According to the figures on April 16, 2024, the ten spot Bitcoin ETFs jointly held close to 862,162 BTC, worth $54.7 billion.
Published At
4/17/2024 1:26:53 PM
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