GBTC experiences a 33% decline in Bitcoin assets as $9.26 billion flows out.
Grayscale, the largest manager of cryptocurrency assets worldwide, has experienced a significant decrease in its Bitcoin holdings since converting its Bitcoin Trust (GBTC) into an exchange-traded fund (ETF) on January 10. According to BitMEX Research, GBTC saw its 36th consecutive day of outflows on March 4, with 5,450 BTC, equivalent to $368 million, leaving the trust. This brings the total outflow since the conversion to a staggering $9.26 billion. Prior to the conversion, Grayscale’s holdings were estimated to be around 620,000 BTC. The conversion allowed investors to redeem their shares for Bitcoin, which was not possible under the trust’s previous structure. However, the relatively higher fees of GBTC compared to other ETFs have contributed to the ongoing outflows. Currently, GBTC holds 420,682 BTC, valued at approximately $28.5 billion.
The market has been closely watching the situation, trying to predict when the outflows, often referred to as the “Bitcoin bleed,” will stop. There was some slowdown in the outflows in late January and February, leading analysts to suggest an impending end. However, the scenario changed in mid-February when bankruptcy courts allowed the crypto lender Genesis to liquidate about $1.6 billion worth of GBTC shares to reimburse investors.
Speculations about the end of the outflows vary, with Bloomberg ETF analyst Eric Balchunas previously estimating that it would stop after a 25% reduction in shares. A poll on X indicated that many expected it to happen within a range of 35-50%.
In the midst of these developments, Grayscale has been advocating for the approval of options on spot Bitcoin ETFs by the Securities and Exchange Commission (SEC). They argue that this would benefit GBTC investors and others in similar products by providing new ways to generate income and hedge financial positions. Michael Sonnenshein, CEO of Grayscale, emphasized the importance of approving options for spot BTC ETFs, as it could bring in additional stakeholders and expose spot Bitcoin ETFs to new investor classes and capital.
The performance of other spot Bitcoin ETFs has been remarkable amid a sustained Bitcoin rally. On March 4, these ETFs experienced their second-largest volume day, with approximately $5.5 billion traded. The BlackRock IBIT fund alone reported a daily volume of around $2.4 billion, and its assets under management surpassed $11 billion.
Additionally, Fidelity reported a record day for inflows on the same date, with $404.6 million entering the fund, offsetting the outflows from GBTC. The Bitwise Bitcoin ETF (BITB) also saw significant interest, with $91 million in inflows, marking its highest since February 15.
This surge in spot Bitcoin ETFs has contributed to an increase in the price of Bitcoin, which saw a 9% rise on March 4, approaching its all-time high of $68,789 recorded in November 2021. The rise in Bitcoin’s price has also had a positive impact on other cryptocurrencies, with notable increases in meme coins such as Dogecoin (DOGE) and Shiba Inu (SHIB) coin.
