Bitcoin Spot ETF Jitters Subside: Grayscale Outflows Drop To New Lows

Scott Matherson

1 year ago

3 mins read

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Outflows from Grayscale’s Bitcoin Trust (GBTC) seem to be slowing down, as shown by the trading activity of Bitcoin ETFs. This comes as investor anxiety over Grayscale’s Spot ETF seems to finally be subsiding, with the entire ETF cohort continuing to attract huge trading volumes and rapid growth in assets under management. As a result, the GBTC saw daily outflows drop steadily over the course of the week to just $44.2 million on Friday, the lowest since spot Bitcoin ETFs went live.

Outflows Drop As Grayscale’s BTC ETF Stabilizes

After several weeks of elevated outflows totaling over $7.44 billion, investors pulled just $436.2 million of Grayscale’s Bitcoin Trust last week. Notably, the lowest daily outflow of $44.2 million came on the last day of the week.

Grayscale’s GBTC is undoubtedly the biggest Bitcoin ETF among its cohort. This is because GBTC was launched in 2013 as a Bitcoin trust available only in OTC markets., allowing it to grow over the years as it was the only go-to for investors looking to dive into the crypto industry.

However, after a lengthy regulatory procedure, the SEC finally approved GBTC’s conversion into a Spot Bitcoin ETF. Consequently, Grayscale’s new Bitcoin ETF went live on January 11, along with nine other recently approved ETFs.

GBTC held around $27 billion worth of BTC assets when it first began trading as an exchange-traded fund (ETF). Surprisingly, Grayscale’s conversion into an ETF came along with a vast amount of withdrawals from investors, and by the end of January, GBTC had witnessed $5.55 billion worth of withdrawals.

Many analysts have attributed Grayscale’s high management fees (1.5%) to the outflows. 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 the Fidelity Wise Origin Bitcoin Fund (FBTC) with $4.73 billion.

What’s Next For Grayscale’s Bitcoin ETF?

While last week’s outflow data is an encouraging sign for Grayscale and the wider ETF market, outflows could continue in the coming weeks. Bankrupt crypto lending firm Genesis recently received court approval to sell its $1.3 billion worth of GBTC in order to repay its creditors.

The prospect of a liquidation of such gravity has propelled concerns amongst investors of the potential downward implications on the price of BTC. However, many others 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 worth of assets under management.

BTC price at $51,200 | Source: BTCUSD on Tradingview.com

Featured image from Vegavid Technology, chart from Tradingview.com

Scott Matherson

Scott Matherson is a prominent crypto writer at NewsBTC with a knack for capturing the pulse of the market, covering pivotal shifts, technological advancements, and regulatory changes with precision. Having witnessed the evolving landscape of the crypto world firsthand, Scott is able to dissect complex crypto topics and present them in an accessible and engaging manner. Scott's dedication to clarity and accuracy has made him an indispensable asset, helping to demystify the complex world of cryptocurrency for countless readers.

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With years of experience in the crypto market, Scott began to focus on his true passion: writing. During this time, Scott has been able to author countless influential pieces that have drawn in millions of readers and have shaped public opinion across various important topics. His repertoire spans hundreds of articles on various sectors in the crypto industry, including decentralized finance (DeFi), decentralized exchanges (DEXes), Staking, Liquid Staking, emerging technologies, and non-fungible tokens (NFTs), among others.

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