The recent decline in cryptocurrency prices, largely influenced by significant withdrawals from the Grayscale Bitcoin Trust (GBTC), appears to be a key factor in the outflows from digital asset investment products across Europe and Canada, as reported by CoinShares.
CoinShares’ report dated January 28 highlights that the notable outflows from Grayscale, an established ETF issuer in the U.S., amounting to $5 billion, have likely triggered similar outflows in other regions.
During the week of January 22 to January 26, digital asset products in Switzerland and Germany experienced significant outflows, amounting to $59.8 million and $31.7 million respectively, according to CoinShares’ data.
In January, Canadian digital asset products saw the highest outflows, totaling $209.8 million. This was followed by Germany and Sweden, with outflows of $124.5 million and $34.2 million, respectively.
Contrastingly, Brazil’s digital asset products witnessed a major inflow of $10.3 million in the same week. Meanwhile, the U.S. saw nearly $500 million in outflows during the second full week of spot Bitcoin ETF trading. Despite the introduction of nine new spot Bitcoin ETFs, which brought in nearly $1.8 billion, they couldn’t offset the over $2.2 billion outflow from Grayscale’s converted spot Bitcoin ETF, GBTC.
CoinShares noted a reduction in daily outflows from GBTC, indicating a slowdown. Previously, GBTC was a lucrative option for investors who borrowed to invest and profited from the Grayscale premium, which peaked at 43% in July 2019, as per YCharts data.
The GBTC arbitrage opportunity disappeared when the premium turned into a discount in February 2021. The mandatory six-month lock-up period for GBTC shares left many investors reluctant to sell at an increasing discount.
Following its conversion to a spot Bitcoin ETF, GBTC’s discount decreased from 1.55% to 0% on January 26, as shown by YCharts data. Despite a $5 billion reduction in GBTC this month, the newly issued spot Bitcoin ETFs have seen a total of $5.94 billion in inflows since they began trading on January 11.
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