Grayscale, the world’s largest crypto asset manager, finds itself in the midst of a relentless Bitcoin exodus. Since mid-January, nearly 33% of its Bitcoin holdings on GBTC have vanished, marking a dramatic turn since its conversion into an ETF.
March 4 witnessed GBTC’s 36th consecutive day of outflows, with a staggering 5,450 BTC or $368 million exiting the trust. This exodus amounts to a total outflow of $9.26 billion since the conversion, according to BitMEX Research.
Before transitioning the fund into an ETF, Grayscale boasted approximately 620,000 BTC under its purview, as reported by Coinglass. However, the launch of Grayscale’s spot Bitcoin ETF introduced a pivotal change — investors gained the ability to redeem their shares for Bitcoin, a previously unavailable option. Moreover, GBTC’s higher fees in comparison to other ETFs like BlackRock’s IBIT and Fidelity’s FBTC have compounded its challenges.
As of now, the GBTC fund holds 420,682 BTC, valued at roughly $28.8 billion at current prices, as per its website and portfolio data. Market observers remain engaged in speculation regarding when GBTC might stem its “Bitcoin bleed.”
While GBTC outflows decelerated in late January and February, hopes of an imminent halt were dashed when bankruptcy courts authorized crypto lender Genesis to liquidate approximately $1.3 billion worth of GBTC shares in mid-February to reimburse investors.
Bloomberg ETF analyst Eric Balchunas previously theorized that the bleeding would cease once GBTC loses 25% of outstanding shares. However, a self-selected poll on X indicated that most respondents envisioned this happening in the 35-50% range.
Meanwhile, the performance of nine other spot Bitcoin ETFs has defied expectations amidst a sustained Bitcoin rally. March 4 emerged as the second-largest volume day for the ten spot Bitcoin ETFs, with approximately $5.5 billion in total volume, as confirmed by Balchunas.
The BlackRock IBIT fund witnessed approximately $2.4 billion in daily volume, propelling its assets under management beyond $11 billion. Balchunas noted that each of the new ETFs has experienced over a 30% increase in volume within six days, a trend likely to sustain the flow momentum.
As the cryptocurrency landscape continues to evolve, Grayscale’s Bitcoin saga underscores the dynamic shifts reshaping the industry. With investors closely monitoring the fate of GBTC and the burgeoning success of alternative ETFs, the crypto market remains a terrain of both challenge and opportunity.
