Higher-cost incumbent crypto fund issuers witness $2.9 billion outflows
Since the launch of new spot bitcoin exchange-traded funds on Jan. 11, higher-cost incumbent crypto fund issuers in the United States have experienced outflows worth $2.9 billion, according to CoinShares’ latest report. Grayscale’s GBTC has seen the largest outflows, with over $2.8 billion leaving the fund due to fees of 1.5% and likely profit-taking after converting to an ETF. The fees for Grayscale’s converted fund and other incumbents are significantly higher than those offered by the new spot bitcoin ETFs, many of which have reduced or zero fees initially.
Spot bitcoin ETFs attract $4 billion inflows
The newly-issued spot bitcoin ETFs have attracted total inflows of $4 billion since their launch, or $1.2 billion net of Grayscale’s converted fund. These new products offer lower fees compared to incumbents, with permanent fees ranging between 0.2% and 0.5%.
Minor outflows last week as trading volumes spike
Last week, digital asset investment products experienced minor outflows of $21 million overall, with bitcoin-based funds seeing net outflows of $25 million. However, investors took advantage of recent price weakness to add to short-bitcoin investment products, resulting in inflows of $13 million. Bitcoin has fallen around 5% over the past week to $40,900.
Altcoin investment products suffer while blockchain equities perform well
Altcoin investment products like ether and Solana funds registered outflows of $14 million and $8.5 million, respectively. On the other hand, blockchain equities saw inflows worth $156 million, contributing to a nine-week run totaling $767 million.
Migration to the U.S. observed in last week’s flows
Last week’s flows indicated a migration to the U.S., with $263 million worth of inflows compared to combined outflows of $297 million from Canada and Europe.
Trading volume spikes as bitcoin investment products dominate
Last week, trading volume for bitcoin investment products reached $11.8 billion, seven times the 2023 weekly average. This represents 63% of all bitcoin volume on trusted exchanges, highlighting the dominance of exchange-traded product activity currently.
Hot Take: Crypto Fund Outflows in the U.S. Driven by Lower Fees and Profit-Taking
Since the launch of new spot bitcoin exchange-traded funds, higher-cost incumbent crypto fund issuers in the United States have witnessed significant outflows, while the new ETFs have attracted substantial inflows. The main factors behind these outflows are higher fees charged by incumbent funds compared to the lower or zero fees offered by the new products. Additionally, investors may be taking profits after converting their holdings to ETFs. This trend indicates a preference for cost-effective investment options in the crypto market. Meanwhile, trading volumes have surged, reflecting growing interest in bitcoin investment products.
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