Grayscale’s Bitcoin Trust GBTC Sees Lowest Daily Outflows Since ETF Conversion
Grayscale’s flagship Bitcoin Trust, GBTC, has recorded its lowest daily outflows since it converted to an ETF. On February 23, the outflow was just $44.2 million, marking the lowest level since its launch as an ETF on January 11. In total, Grayscale has experienced outflows of $7.4 billion.
Indications of Another Selloff
Despite the recent low outflows, there are indications that another selloff may be on the way. A bankruptcy court has approved Genesis, a bankrupt lender, to sell $1.3 billion in GBTC shares to repay its creditors. However, parent company Digital Currency Group (DCG) has challenged the plan, arguing that it uses an accounting method that allows customers to potentially recoup their lost assets while also profiting from the increase in value since the lender filed for bankruptcy in early 2023.
Grayscale Finds Balance
Grayscale’s GBTC is currently the largest ETF with $23 billion in assets under management (AUM). It began as a Bitcoin fund in 2013 but had always planned to convert to an ETF. In mid-2015, shares started trading publicly under the ticker GBTC.
Since the approval of nearly a dozen ETFs by the US Securities and Exchange Commission last month, Grayscale’s GBTC has been the only one experiencing outflows. The fund traded at a premium to its underlying asset until around February 2021 and has been trading at a discount since then due to its closed-end structure.
In 2022, the SEC rejected Grayscale’s application to convert to an ETF. However, Grayscale appealed the decision and on August 29, 2023, the rejection was overturned by Judge Neomi Rao, marking a significant victory for the industry.
End of an Arbitrage Trade
With the conversion to an ETF, GBTC’s closed-end structure and discount disappeared. This also put an end to one of the most popular arbitrage trades in the crypto market. Many investors took advantage of this opportunity to exit their positions and make a profit.
Hot Take: GBTC Records Lowest Daily Outflows Since ETF Conversion
Grayscale’s Bitcoin Trust GBTC has recently recorded its lowest daily outflows since converting to an ETF. This is a positive sign for the fund, as it suggests that investor sentiment may be stabilizing. However, there are indications that another selloff may be on the horizon, as a bankruptcy court has approved the sale of $1.3 billion in GBTC shares by Genesis to repay its creditors.
Grayscale’s GBTC is currently the largest ETF in terms of assets under management (AUM), but it has faced challenges since its conversion. It traded at a premium to its underlying asset until February 2021 and has been trading at a discount ever since due to its closed-end structure.
The recent approval of several ETFs by the US Securities and Exchange Commission has further impacted GBTC’s performance, as it has been the only one experiencing outflows. However, Grayscale’s victory in overturning the SEC’s rejection of its ETF conversion application marks a significant milestone for the industry.
Overall, GBTC’s lowest daily outflows since its conversion are an encouraging sign. It remains to be seen whether this trend will continue or if another selloff will occur in the near future.
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