Grayscale’s spot Bitcoin exchange-traded fund (ETF) market share has dipped below 50% for the first time since the inception of spot Bitcoin ETF trading in the United States. Data from Dune Analytics reveals that Grayscale now holds 48.9% of the total assets under management (AUM) in the U.S. Bitcoin ETF market, with its AUM standing at $28.5 billion out of the total $56.7 billion held among ten U.S. Bitcoin ETFs.
Consistent daily outflows from Grayscale’s Bitcoin Trust (GBTC), averaging $329 million per day last week, have contributed to the decline in its market share. Since the launch of Bitcoin ETFs in the U.S., GBTC has witnessed significant outflows, with over $11 billion leaving the fund to date, according to Farside Bitcoin ETF flow data.
Initially, substantial outflows were observed within the first month of Bitcoin ETFs going live, with $7 billion exiting the fund in just over a month. Despite a slowdown in late January, outflows surged again in mid-February following bankruptcy court rulings allowing crypto lender Genesis to liquidate approximately $1.3 billion worth of GBTC shares aimed at reimbursing investors.
Grayscale’s ETF was initially structured as a trust, catering to institutional investors seeking exposure to Bitcoin by locking up funds for at least six months. However, after a court victory over the Securities and Exchange Commission (SEC) and the subsequent approval of other spot Bitcoin ETF applications, the trust was converted into an ETF. This conversion empowered institutional investors to withdraw their capital from the fund or shift their assets to Bitcoin ETFs offering lower fees.
Optimism amidst growing competition
Despite concerns over the declining market share of GBTC, growing net inflows into competitors’ ETFs such as BlackRock’s iShares Bitcoin ETF (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC) have instilled optimism.
Since their inception, these two funds have collectively garnered $16.9 billion worth of inflows. Market commentators have attributed the inflows into the newly launched ETFs as a fundamental driving force behind the rapid appreciation in Bitcoin’s price, reaching a new all-time high of $72,900 on March 11.
BlackRock’s Bitcoin fund, currently holding over 200,000 BTC valued at approximately $14.3 billion, according to K33 Research data, underscores the growing significance of institutional involvement in the cryptocurrency space.
Grayscale’s Bitcoin ETF has experienced a notable decline in market share, dropping below 50% for the first time since the launch of U.S. Bitcoin ETFs. Continuous outflows from GBTC and growing competition from newly launched ETFs have contributed to this trend. However, inflows into alternative ETFs and the increasing institutional adoption of Bitcoin signal a dynamic and evolving landscape in the cryptocurrency market.
