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Grayscale’s GBTC sees outflows as new Bitcoin ETFs attract inflows

In this post:

  • New Bitcoin ETFs drew $1.4 billion, but GBTC faced $579 million in outflows after SEC approval.
  • Investors shifted from GBTC to lower-fee options with the arrival of ETFs.
  • Bitcoin price fell 6.8% post-ETF approval, indicating a market reaction to the news.

In a significant turn of events in the cryptocurrency market, Grayscale’s Bitcoin Trust (GBTC) has experienced a substantial outflow of $579 million in the initial days following the opening of redemptions, which was made possible after the U.S. Securities and Exchange Commission (SEC) approved Bitcoin exchange-traded funds (ETFs). 

In contrast, the newly launched spot Bitcoin ETFs have witnessed inflows totaling a remarkable $1.4 billion in just their first two trading sessions.

Strong Inflows for New Bitcoin ETFs

Bloomberg ETF analyst Eric Balchunas reported that the newly introduced Bitcoin ETFs have had an impressive start, garnering significant attention from investors. These ETFs collectively attracted $1.4 billion in investments during their first two trading sessions. 

This influx of funds into the ETFs was accompanied by a staggering 500,000 individual trades, resulting in a substantial trading volume of $3.6 billion. It is worth noting that these numbers may undergo adjustments due to transactions pending accounting settlement.

After factoring in the $579 million outflow experienced by Grayscale’s GBTC, the net total inflows across all Bitcoin-related products amounted to $819 million. These figures align with earlier predictions made by ETF analyst James Seyffart, who estimated that Bitcoin ETFs could attract approximately $10 billion in their first year of operation.

Reasons behind GBTC outflows

The outflows from Grayscale’s GBTC can be attributed to holders converting their shares. This activity became possible after the SEC granted approval for Bitcoin ETFs through a ruling change. 

Anthony Scaramucci, founder of SkyBridge Capital, noted that some GBTC investors opt to book losses and transition to lower-fee options available through the newly established ETFs.

Grayscale’s GBTC, which has operated since 2013, currently manages over $27 billion worth of Bitcoin assets. However, only on January 1, 2024, did GBTC shares become redeemable for actual Bitcoin, marking a significant development for investors in the trust.

Among the newly launched Bitcoin ETFs, BlackRock’s iShares Bitcoin Trust (IBIT) led the way with total flows of $497.7 million. Fidelity Advantage Bitcoin ETF (FBTC) followed closely behind, amassing $422.3 million in investments, while Bitwise (BITB) attracted $237.9 million.

Bitcoin Price Movement Following ETF Approval

Following a substantial 75% rally in the 90 days leading up to the approval of Bitcoin ETFs, the price of Bitcoin experienced a 6.8% decline between January 11 and January 12. This decline proves the cryptocurrency market often witnesses a “sell-the-news” style event following significant regulatory approvals. At the time of writing, Bitcoin is trading at $42,856, representing a 0.77% decline over the past 24 hours.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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