New Bitcoin ETFs Experience Inflows While Grayscale’s GBTC Faces Outflows
Newly approved Bitcoin exchange-traded funds (ETFs), referred to as the Newborn Nine by ETF expert Eric Balchunas, are gaining traction in the market. These ETFs are competitors of the pioneer Grayscale Bitcoin Trust (GBTC) and have experienced a capital inflow, partially at the expense of GBTC.
Within the first four days after approval, GBTC lost $1.62 billion worth of spot Bitcoin shares. In contrast, the Newborn Nine received an inflow of $2.87 billion, resulting in a net flow of $1.24 billion into Bitcoin ETFs.
Balchunas shared this data from Bloomberg on Twitter on January 18. He explained that these inflows are driven by increased demand for ETF shares, which requires Authorized Participants (AP) to create more shares and purchase a corresponding amount of Bitcoin.
Leading Bitcoin ETFs in Inflows
The largest fund among the Newborn Nine is BlackRock’s iShares Bitcoin Trust (IBIT), which has seen total inflows of $1.08 billion. Fidelity’s FBTC holds the second position with over $800 million in inflows, followed by Bitwise’s BITB with $373 million.
Grayscale’s GBTC Outflows
Grayscale’s CEO, Michael Sonnenshein, considers the outflows from GBTC to be a normal trend now that investors have more competitive options. He expects this trend to continue in favor of the Newborn Nine.
In a recent interview, Sonnenshein defended Grayscale’s higher fees, stating that they were necessary to pave the way for other funds. He emphasized the importance of considering factors such as size, liquidity, and track record when choosing among different products.
Importance of Volume in Bitcoin ETFs
Sonnenshein also highlighted the significance of volume rather than just inflows. GBTC leads in volume, with over $6.56 billion traded in the first four days, compared to BlackRock’s IBIT. In total, Bitcoin ETFs saw a trading volume of $11.93 billion during this period.
Looking Ahead
The cryptocurrency market, stock market, and financial institutions are eagerly awaiting further developments in the Bitcoin ETF space. With traditional finance embracing this new adoption case, Bitcoin is currently in price discovery mode.
Hot Take: The Rise of Newborn Nine and GBTC’s Challenges
The approval of new Bitcoin ETFs has led to a significant shift in investor preferences, resulting in outflows from Grayscale’s GBTC and inflows into the Newborn Nine funds. This trend highlights the growing demand for alternative investment vehicles for exposure to Bitcoin.
While GBTC was once the dominant player in the market, it now faces competition from these new ETFs that offer lower fees and other attractive features. However, GBTC still maintains its lead in terms of trading volume.
This development signifies the maturation of the cryptocurrency market and its integration with traditional finance. As more investors seek regulated and accessible avenues to invest in Bitcoin, the landscape of digital asset investment continues to evolve.
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