Grayscale, the crypto asset manager, has experienced a slowdown in outflows from its spot Bitcoin ETF, GBTC. However, analysts suggest that there may still be further reductions in assets.
Outflow Trends: Since its conversion to a spot Bitcoin ETF, GBTC has witnessed a total outflow of $7 billion, with January seeing the largest exodus at $5.64 billion. February has seen a slower outflow, totaling $1.37 billion so far.
Observers attribute the outflows to investors rebalancing portfolios and moving to spot Bitcoin ETFs with lower fees. Grayscale charges 150 basis points (bps) in fees, while newly launched ETFs offer fees between 0 and 12 bps.
GBTC traded at a significant discount to the Bitcoin market price, roughly 44%, when BlackRock filed for its spot ETF in June 2023. This discount motivated investors to switch to “cheaper” Bitcoin options.
Jim Bianco, founder of Bianco Research, believes that GBTC’s conversion to an ETF closed an arbitrage opportunity, contributing to the outflows. Nate Geraci, President of ETF Store, suggests that the asset bleed may persist, but Grayscale could still maintain significant assets.
Grayscale may launch a new spot Bitcoin ETF with lower fees, known colloquially as a “mini-GBTC.” Additionally, further outflows may occur following a court order allowing bankrupt crypto lender Genesis to sell part of its investments in Grayscale products, including GBTC.
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