Grayscaleโs GBTC Product Expected to Exhaust Bitcoin Holdings in 96 Days
A recent report from blockchain analytics company Arkham suggests that Grayscaleโs GBTC product will deplete all of its Bitcoin holdings within the next 96 days, based on the current rate of redemptions. Since GBTC began trading as an ETF on January 11th, Grayscale has transferred 266.47K BTC out of their wallets for GBTC redemptions, equivalent to a rate of 25.9K BTC per week.
At the start of the year, Grayscale held 618.28K BTC for their Bitcoin Trust GBTC. However, according to Arkhamโs estimates, they now only have 356.44K BTC remaining. If this redemption rate continues, Arkham predicts that Grayscale will run out of Bitcoin holdings in just 14 weeks.
Grayscaleโs Decrease in Bitcoin Holdings
Grayscale, the largest crypto asset manager in the world, has experienced a significant decrease in its Bitcoin holdings since converting GBTC into an ETF in mid-January. Data from BitMEX shows that GBTC has seen 36 consecutive days of outflows as of March 4th, with a total outflow reaching $9.26 billion since the conversion.
This decline in holdings can be attributed to the introduction of a new feature by Grayscale during the launch of its spot Bitcoin ETF. This feature allows investors to redeem their shares for Bitcoin, which was not previously possible. Additionally, GBTC has higher fees compared to Blackrockโs and Fidelityโs ETFs, further contributing to the outflows.
In response to these outflows, Grayscale has introduced a mini trust to compensate for losses suffered by existing GBTC holders and investors.
Theories Behind GBTCโs Outflows
Bloomberg ETF analyst Eric Balchuna suggests that the worst may be over for GBTC, but there are still concerns. He believes that the recent increase in outflows is likely related to recent bankruptcies, given their size and consistency.
However, he also notes that the flows in February showed what retail outflows look like, which are smaller and more random. Balchuna predicts that once the worst is over, only retail investors will remain, and the flows should resemble a trickle similar to what was seen in February.
Hot Take: Grayscaleโs GBTC Running Out of Bitcoin
In a concerning development for Grayscaleโs GBTC product, Arkham predicts that at its current rate of redemptions, the company will exhaust all of its Bitcoin holdings within the next 96 days. Since GBTC transitioned into an ETF in January, Grayscale has already transferred 266.47K BTC out of their wallets for GBTC redemptions, averaging a rate of 25.9K BTC per week.
This significant depletion of Bitcoin holdings has left Grayscale with just 356.44K BTC remaining from an initial 618.28K BTC at the start of the year. If this redemption rate continues, Arkham estimates that Grayscale will run out of Bitcoin in just 14 weeks.
The decrease in Grayscaleโs Bitcoin holdings can be attributed to several factors:
- The introduction of a new feature during the launch of its spot Bitcoin ETF, allowing investors to redeem their shares for Bitcoin.
- Higher fees compared to other ETFs in the market, such as those offered by Blackrock and Fidelity.
These factors have contributed to a consistent outflow from GBTC, prompting Grayscale to introduce a mini trust to compensate for losses experienced by existing GBTC holders and investors.
There are various theories surrounding the outflows from GBTC:
- Bloomberg ETF analyst Eric Balchuna suggests that recent bankruptcies may be the cause of the increased outflows, given their size and consistency. However, he believes that the worst may be over for GBTC.
Despite these challenges, it remains to be seen how Grayscale will navigate this situation and whether they can sustain their Bitcoin holdings in the long run.
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