Bitcoin ETF Demand Slows as Grayscale Records Outflow
The demand for Bitcoin exchange-traded funds (ETFs) appears to be declining as funds and institutional investors are slowing down their acquisition of BTC. Grayscale, the world’s largest crypto asset manager, experienced a record outflow of $643 million on March 18, surpassing its previous daily outflow record of $640 million. This outflow is equivalent to approximately 9,600 BTC. Grayscale’s Bitcoin holdings have decreased by nearly 40% since its fund was converted to a spot ETF in mid-January, with around 241,830 BTC being withdrawn over the past ten weeks.
Grayscale’s Declining Holdings:
- Grayscale held approximately 620,000 BTC at the start of the year.
- The company’s holdings have now dwindled to 378,169 BTC.
- Investors are pulling out of Grayscale due to the ability to convert their shares into BTC directly.
- The old GBTC structure did not allow for this option.
- Grayscale has higher fees compared to rival ETPs, leading investors to rebalance their portfolios.
In response to the outflows, Grayscale has filed an application to launch a “Grayscale Bitcoin Mini Trust” under the ticker BTC that would offer more competitive options for investors.
Record Outflows and Declining Inflows:
- Fidelity’s FBTC fund saw just a $5.9 million inflow on March 18.
- BlackRock’s IBIT inflows have also been steadily declining over the past four trading days.
- Total net inflows have slowed and dropped below $200 million in recent days after reaching a record inflow of over $1 billion on March 12.
Low Portfolio Allocations for Bitcoin ETFs
According to Carson Group vice president and investment strategist Grant Engelbart, only a “handful of advisors” are allocating an average of 3.5% of Bitcoin ETFs to client household portfolios. This aligns with ETF analyst Eric Balchunas’ findings that early adopters are making allocations into BTC, but the majority of advisors have not yet solicited their clients. The current inflows into Bitcoin ETFs are primarily driven by inbound traffic.
Bitcoin Price Decline
Meanwhile, the price of Bitcoin continues to decline, dropping 5% in a single day and trading at $65,100 at the time of writing. BTC has now corrected 12% from its all-time high reached five days ago.
Hot Take: Bitcoin ETF Demand Slows Down Amidst Grayscale Outflow Record 📉
The demand for Bitcoin exchange-traded funds (ETFs) is showing signs of slowing down as institutional investors and funds reduce their acquisitions of BTC. Grayscale, the largest crypto asset manager globally, experienced a record outflow of $643 million on March 18, surpassing its previous daily outflow record. This decline in demand is reflected in Grayscale’s declining Bitcoin holdings, which have decreased by nearly 40% since the fund was converted to a spot ETF. Additionally, other ETFs like Fidelity’s FBTC fund and BlackRock’s IBIT have seen low inflows or steady declines over recent days. Despite this, a handful of advisors are allocating an average of 3.5% of Bitcoin ETFs to client portfolios. The overall decrease in demand and declining Bitcoin prices indicate a potential shift in market sentiment.
By
By
By