Fidelity’s Spot Bitcoin ETF gathers $208M in daily inflows, outpacing Grayscale Bitcoin Trust

In a significant turn of events for the cryptocurrency market, Fidelity’s Spot Bitcoin exchange-traded fund (ETF), FBTC, attracted a staggering $208 million daily inflows on January 29, 2024. This achievement marks a notable milestone as FBTC outstripped outflows from the Grayscale Bitcoin Trust (GBTC) for the first time since its launch.

Provisional data from Farside Investors revealed the substantial influx of $208 million into Fidelity’s FBTC on Monday. In contrast, GBTC experienced outflows totaling $192 million on the same day, marking its lowest daily outflows, except for its re-launch, according to BitMEX Research data.

This development comes on the heels of a nearly 25% drop in GBTC outflows from $255 million on January 26 and a significant 70% decline from the fund’s peak daily outflows of $641 million on January 22. Notably, the $95 million that left the fund on January 11, the day it transitioned into a spot Bitcoin ETF, remains the lowest outflow day for Grayscale’s fund.

GBTC outflows and their impact on Bitcoin’s price

Crypto enthusiasts have closely monitored GBTC outflows associated with downward price pressure on Bitcoin. However, JPMorgan analysts suggested that the worst may be over regarding GBTC-related outflows, providing some relief to Bitcoin investors.

On January 29, 2024, data revealed that nine new U.S. spot Bitcoin ETFs collectively amassed a remarkable volume of $994.1 million. This impressive figure is nearly double that of GBTC, which recorded $570 million in volume during the same period. 

Among these new ETFs, BlackRock’s iShares Bitcoin Trust (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC) emerged as significant players, with daily volumes of $460.9 million and $315.4 million. These two funds accounted for 78% of the combined volume generated by the nine new ETFs.

Competition leads to fee reductions

The increasingly crowded market for spot Bitcoin ETFs has prompted fund issuers to reduce fees to attract investors in the United States and internationally. Notably, Invesco and Galaxy Asset Management announced on January 29 that they would lower the expense ratio of their joint ETF, Invesco Galaxy Bitcoin ETF (BTCO), from 0.39% to 0.25%.

This fee reduction aligns BTCO’s expenses with those of other major players in the market, including BlackRock, Fidelity, Valkyrie, and VanEck. Furthermore, BTCO has implemented a unique offer of zero fees for the first six months or until it accumulates $5 billion in assets; at this point, the lower fee will take effect.

The fee wars in the United States have had repercussions beyond its borders, affecting Europe’s ETF market. There is speculation that traders are shifting their investments from Europe-based products to the United States, as research from CoinShares indicates.

Notably, Invesco reduced fees on its Europe-based Bitcoin ETF from 0.99% to 0.39% on January 23, 2024, and WisdomTree followed suit by cutting fees from 0.95% to 0.35%. CoinShares also joined the trend on January 25 by reducing fees on its flagship Bitcoin ETF from 0.98% to 0.35%.