Grayscale Bitcoin ETF Witnesses Massive Outflow as BTC Price Declines
The Grayscale Bitcoin Trust (GBTC) has experienced a significant outflow of funds, with $643 million leaving the ETF on March 18. This marks the largest outflow in GBTC’s history, according to Bloomberg Intelligence ETF analyst Eric Balchunas. As a result, the net flow for spot Bitcoin ETFs on that day was negative $154.4 million.
Reasons for GBTC Outflows
- Higher management fee: One possible reason for the significant outflows from GBTC is its higher management fee of 1.5%, compared to other competitors charging less than 0.3%.
- Selling pressure from bankrupt entities: Entities like Genesis Global Holdco LLC, which are going through bankruptcy proceedings, have been selling off their GBTC holdings.
- Unexpected duration and consistency of outflows: While some outflows were expected during the fund’s potential conversion, the extent and consistency of the outflows have surprised observers.
Bitcoin Price Decline
In addition to the GBTC outflows, the price of Bitcoin has been steadily declining. At the time of writing, Bitcoin is trading at $64,661, down by 5.92% over the past 24 hours and more than 10% lower than a week ago, according to CoinMarketCap.
Crypto.com CEO’s Perspective
Kris Marzsalek, CEO of Crypto.com, sees the Bitcoin price correction as a healthy development for the market. He believes that it removes some of the leverage built up in the system and expects a steady ramp-up in inflows over the next 12 to 18 months.
GBTC’s Ongoing Outflows
The Grayscale Bitcoin Trust has been experiencing significant outflows since its inception. According to Bloomberg data, a total of $7.4 billion has exited the fund in its first 31 trading days. This is in contrast to other recently launched spot Bitcoin ETFs, which have seen net inflows.
Higher Management Fee
One possible reason for the substantial outflows from GBTC is its higher management fee of 1.5%. This fee is higher than that of its competitors, who charge less than 0.3%. Investors may be opting for lower-cost alternatives.
Selling Pressure from Bankrupt Entities
Entities like Genesis Global Holdco LLC, which are going through bankruptcy proceedings, have been selling off their GBTC holdings. This selling pressure contributes to the ongoing outflows from the fund.
Unexpected Duration and Consistency of Outflows
Observers have been surprised by the duration and consistency of the outflows from GBTC. While some outflows were anticipated during the fund’s potential conversion, the extent of the outflows has exceeded expectations.
Bitcoin Price Falls Below $65,000
The price of Bitcoin has been on a downward trend, reaching below $65,000. At the time of writing, Bitcoin is trading at $64,661, marking a decline of 5.92% over the past 24 hours and more than 10% compared to a week ago.
Crypto.com CEO’s Perspective
Kris Marzsalek, CEO of Crypto.com, views the Bitcoin price correction as a positive development for the market. He believes that it will remove excessive leverage from the system and expects a steady increase in inflows over the next 12 to 18 months.
Hot Take: GBTC Sees Record Outflow as Bitcoin Price Drops
The Grayscale Bitcoin Trust (GBTC) experienced its largest outflow to date, with $643 million leaving the ETF on March 18. This significant outflow, combined with the declining price of Bitcoin, indicates a challenging period for cryptocurrency investors.
Factors contributing to the GBTC outflows include its higher management fee compared to competitors and selling pressure from bankrupt entities. The unexpected duration and consistency of the outflows have caught observers off guard.
As Bitcoin’s price continues to decline, reaching below $65,000, some industry experts see this correction as a healthy development for the market. They believe it will remove excessive leverage and pave the way for a more sustainable growth trajectory in the future.
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