Grayscale GBTC Outflows Reach $7 Billion
Since its conversion to a spot Bitcoin ETF, Grayscale GBTC has experienced significant outflows, with a total of $7 billion withdrawn as of February 16th. While the rate of outflows has slowed down, GBTC is facing tough competition from ETFs by BlackRock and Fidelity, which have attracted inflows and grown their asset bases.
January Saw the Bulk of Outflows
The majority of the outflows occurred in January, with $5.64 billion leaving GBTC by the end of the month. So far in February, there have been $1.37 billion in outflows, indicating a slower rate of outflows.
In a recent tweet, ETF Store President Nate Geraci predicts that GBTC will continue to experience outflows. Market experts also suggest that this trend may persist for some time.
GBTC Loses Market Share
GBTC previously held a dominant position in the spot ETF market, accounting for over half of trade volumes. However, recent data shows a significant decrease in its market share, dropping to around 30% last week according to figures from Kaiko.
Factors Contributing to Outflows
There are two main factors behind the continued outflows from GBTC. Firstly, competition from other funds with lower fees has attracted investors away from Grayscale’s comparatively higher fee structure. Competing funds now offer fees as low as 0 to 12 basis points.
Secondly, before its conversion to an ETF, Grayscale consistently traded at a discount to the price of BTC as a closed-end fund. The introduction of a spot BTC ETF by BlackRock prompted investors to seek cheaper alternatives. As Grayscale transitioned into an ETF, investors closed their “arbitrage-type” trades, leading to the observed outflows.
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