TL;DR
- Grayscale’s Bitcoin Trust (GBTC) saw a total fund outflow of $7 billion after its conversion to a spot Bitcoin ETF on February 16. The largest segment of the outflow occurred in January, with $5.64 billion exiting GBTC.
- The outflow is largely a result of investors transitioning to spot Bitcoin ETFs that charge lower fees. The fund was also trading at a significant discount to the BTC market price, approximately a 44% discount to Bitcoin.
- Additional outflows could be triggered following a recent court approval that permits the insolvent crypto lender Genesis to liquidate a portion of its investments in Grayscale.
Grayscale, a prominent crypto asset manager, has been experiencing a deceleration in the outflows from its Bitcoin spot ETF. Despite this slowdown, some market watchers suggest that there could be more outflows in the future.
GBTC has $7bil outflows in past 5 weeks…
What a chart.
Outflows clearly slowing.
Interested to see what happens moving forward.
Play for Grayscale IMO is to launch “mini-GBTC” (spot bitcoin ETF at significantly lower fee). SPDR did this w/ GLD & GLDM.
via @biancoresearch pic.twitter.com/NrZnqzUiAi
— Nate Geraci (@NateGeraci) February 19, 2024
Bianco Research and Farside have reported that the Grayscale Bitcoin Trust (GBTC) saw a total fund outflow of $7 billion after its conversion to a spot Bitcoin ETF on February 16. Although the outflow rate has significantly reduced, some observers, such as Nate Geraci, the President of ETF Store, believe that the outflows might not have completely ceased.
The largest segment of the outflow from Grayscale’s Bitcoin spot ETF occurred in January, with $5.64 billion exiting GBTC by the end of the month. In contrast, February has so far witnessed outflows amounting to only $1.37 billion.
How Grayscale’s GBTC Discount and Genesis Liquidation Could Affect the Fund
Jim Bianco, the founder of Bianco Research and a former Wall Street analyst and commentator, suggested in a post on February 18 that the outflow is largely a result of investors rebalancing their portfolios and transitioning to spot Bitcoin ETFs that charge lower fees.
He further noted that the recently introduced ETFs have reduced their fees to a range of 0 to 12 basis points, while Grayscale continues to charge 150 basis points.
Bianco also provided another explanation for the ongoing outflow from GBTC: the fund was trading at a significant discount to the BTC market price, approximately a 44% discount to Bitcoin, at the time BlackRock filed for its spot ETF in June 2023.
Geraci, on the other hand, thinks that it’s still too soon to conclude and anticipates that the asset outflow will persist. He also suspects that Grayscale might create a “mini-GBTC,” a different and new spot Bitcoin ETF with a greatly reduced fee.
Additional outflows could be triggered following a recent court approval that permits the insolvent crypto lender Genesis to liquidate a portion of its investments in Grayscale. As per the court documents, Genesis had approximately $1.6 billion in shares in GBTC, the Grayscale Ethereum Trust, and the Grayscale Ethereum Classic Trust.
