Investor’s Guide: Crucial Information on Net Outflow

The BTC ETF market experienced its first net total outflow of $158 million on January 24, as investor interest in GBTC dipped significantly. What comes next?
The launch of Bitcoin exchange-traded funds (ETFs) listed in the U.S. marks a significant milestone in the cryptocurrency’s journey toward mainstream financial acceptance.
On January 11, the first day of trading, these ETFs, which include 11 notable names such as BlackRock’s iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF, saw an impressive $4.6 billion in trading volume.
Leading the charge in terms of dominant trading volumes are firms like BlackRock and Fidelity, while others like Vanguard have chosen to remain on the sidelines, despite the SEC’s approvals for their spot BTC ETF. Vanguard cites the high-risk nature of Bitcoin as an investment.
However, the enthusiasm surrounding these ETFs is tempered by a note of caution from the U.S. Securities and Exchange Commission (SEC). The SEC, although approving these ETFs, made it clear that the approval does not constitute an endorsement of Bitcoin, and it still considers it a speculative and volatile asset.
Furthermore, financial experts, including those from Goldman Sachs, have expressed skepticism about the intrinsic value of crypto assets like Bitcoin.
As these ETFs continue to trade, it is important to understand who is leading the ETF race and what is happening in the BTC ETF market.
Leading the pack among all spot BTC ETFs is the Grayscale Bitcoin Trust (GBTC) as of January 29. Despite GBTC’s premium fee of 1.50%, the highest among its peers, Grayscale has a market cap of almost $26 billion and assets under management (AUM) of over $20 billion.
BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Trust (FBTC) are competing for attention with more investor-friendly fees of 0.25% each. IBIT has accumulated an AUM of nearly $2 billion, while FBTC closely follows with $1.75 billion, ranking second and third respectively as of January 29.
Following the top three ETFs are funds like Ark/21 Shares’ Bitcoin Trust (ARKB) and Bitwise’s Bitcoin ETP (BITB). ARKB has an AUM of $529 million and a competitive fee of 0.21%, making noticeable waves. Bitwise, slightly behind with an AUM of $511 million and a fee of 0.20%, is also striving to make progress.
Coinbase’s role as a common custodian for many of these ETFs adds an intriguing twist to the narrative. Despite its integral role, Coinbase’s stock price has surprisingly dropped by around 7% since the launch of these ETFs and is currently trading at $125 as of January 29.
Recent developments surrounding the launch of spot Bitcoin ETFs have yielded some unexpected results. Bloomberg Intelligence analyst James Seyffart reported that the 10 spot Bitcoin ETFs saw a net total outflow of $158 million on January 24, the first occurrence of such an event since their inception on January 11.
BlackRock’s IBIT absorbed a significant portion of this outflow, amounting to $66 million. However, GBTC, which had been leading the pack, experienced a notable decline in investor interest. The total number of Bitcoins in the trust fell sharply to 502,712 as of January 29 from over 590,000 BTCs at the beginning.
In contrast, BlackRock’s IBIT and Fidelity’s FBTC have shown promising growth. Both funds have doubled their Bitcoin holdings, with IBIT holding nearly 50,000 BTC and FBTC holding over 40,000 BTC as of January 26.
Despite the mixed results, the cumulative inflows into these spot ETFs since their launch remain significant. Bloomberg’s Eric Balchunas estimates the total dollar inflows at around $824 million, resulting in a net addition of approximately 17,000-20,000 tokens.
The price of Bitcoin has been a crucial factor influencing these trends. The approval of these ETFs initially drove Bitcoin to a 52-week high of $48,969 on January 11. However, the market entered a bearish phase afterward, with the price dropping to around $38,500 by January 23. Since then, there has been a rebound, with Bitcoin surpassing the $40,000 resistance it faced in the preceding days and trading around $42,000 as of January 29.
Looking ahead, several factors could potentially boost Bitcoin’s price, such as a potential U.S. recession in 2024, U.S. presidential elections, and the fourth Bitcoin halving scheduled for April 2024. Additionally, the trend of countries adopting Bitcoin, as seen with El Salvador and the Central African Republic, could continue this year, leading to increased demand for BTC and BTC-related products like spot and futures ETFs.
The combination of these factors makes the future of Bitcoin and Bitcoin ETFs both exciting and unpredictable.
Disclosure: This article is for educational purposes only and does not constitute investment advice. The content and materials featured on this page should not be relied upon as such.
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