Bitcoin Spot ETFs Experience Significant Outflows
A recent trend has emerged in the United States as Bitcoin spot ETFs are seeing a decline in momentum. On Tuesday, these funds experienced their largest daily net outflow since their launch, with a total of $326 million or 5,117 BTC being withdrawn. This follows another day of outflows on Monday when $154.4 million or 2,293.1 BTC was lost.
It’s worth noting that these outflows were primarily from the Grayscale Bitcoin Trust (GBTC), which alone accounted for a loss of $1.086 billion in Bitcoin this week. Monday was particularly challenging for GBTC as it lost $642.5 million in assets, making it the fund’s worst-performing day as an ETF.
While the iShares Bitcoin Trust (IBIT), which is Grayscale’s largest competitor, managed to offset some of GBTC’s selloff with $451.5 million of inflows on Monday, it only attracted $75.2 million on Tuesday – one of its worst performances since its launch. Apart from Fidelity and Bitwise, no other Bitcoin ETFs saw net inflows during this period.
The Reasons Behind Bitcoin Spot ETFs Losing Money
One possible reason for the decline in Bitcoin spot ETFs is that investors are “selling the news” after the highly anticipated launch of these funds in January. This is similar to what happened shortly after their introduction when Bitcoin’s price fell from $49,000 on launch day to $39,000 within two weeks.
Another factor contributing to the outflows could be the slowing down of ETF inflows on Friday, which caused a retracement in Bitcoin’s price from $74,000 to $64,000 at the time of writing.
Grayscale’s Outflows Explained
According to on-chain data analysts at Glassnode, pullbacks like these are common during Bitcoin bull markets. Long-term holders tend to sell their coins once they’ve accumulated enough profits on paper. Since December, over 700,000 BTC has left the hands of long-term holders, with 60% of it coming from Grayscale.
James Check, the lead analyst at Glassnode, believes that it’s natural for the market to pause and correct after reaching all-time highs. He suggests that this is a time for the market to consolidate and digest recent moves.
The Impact on Grayscale
Grayscale has not experienced a single day of net inflows since January 11. As old investors sell their shares at a profit, new Bitcoin investors see little incentive to invest in the fund due to its higher management fees compared to newer alternatives.
To address this issue, Grayscale CEO Michael Sonnenshein stated in an interview that GBTC would lower its management fee over time. Additionally, the company has filed for a “mini” Bitcoin ETF, which is expected to have a lower fee than its flagship fund.
Hot Take: Bitcoin Spot ETFs Face Significant Outflows
The recent outflows from Bitcoin spot ETFs in the United States indicate a decline in momentum for these funds. The Grayscale Bitcoin Trust (GBTC) has been particularly affected, experiencing significant losses in assets. This trend may be attributed to investors “selling the news” and the slowing down of ETF inflows. However, it is important to remember that pullbacks are common during bull markets as long-term holders take profits. Grayscale is actively working on strategies to address the outflows and attract new investors.
Sources: Cryptonews
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