Grayscale GBTC Outflows Hit $7B

Grayscale has seen a slowdown in outflows from its spot Bitcoin ETF despite ongoing concerns about potential further losses.

Grayscale, a cryptocurrency asset manager has reported that outflows from its spot Bitcoin ETF have continued to slow down, although observers feel there is still an opportunity for additional bleeding.

According to data from Bianco Research and Farside, investors have withdrawn $7 billion from the Grayscale Bitcoin Trust (GBTC) since its conversion into a spot Bitcoin exchange-traded fund (ETF) on February 16.

Analysts such as Nate Geraci, President of ETF Store, believe that the bleeding may not necessarily be over despite the significant slowdown in the outflow rate.

January was the month that witnessed the greatest share of the outflow, with $5.64 billion leaving GBTC by the end of the month.

However, February has only seen $1.37 billion in withdrawals thus far. Jim Bianco, the founder of Bianco Research and a veteran Wall Street analyst and commentator stated in an article published on X on February 18 that investors are adjusting their portfolios and shifting their focus to Bitcoin exchange-traded funds (ETFs) with lower costs, contributing significantly to the outflow.

He said that Grayscale continues to charge 150 basis points, whereas the newly introduced batch of exchange-traded funds (ETFs) has reduced their costs to between 0 and 12 basis points.

Bianco provided an additional explanation for the ongoing withdrawal of funds from GBTC. He stated that the fund was trading at a significant discount to the BTC market price, which was approximately 44% lower than the price of Bitcoin when BlackRock applied for its spot ETF in June of 2023.”

“When it [Grayscale] converted to an ETF on January 11, 2024, they began to close this ‘arbitrage-type’ trade as their goals were accomplished.”

A lot of money flows into ‘cheap’ Bitcoin,” he said, adding that Geraci believes it is still early and that the “asset bleed” will continue.” In the meantime, he believes that the situation is still emerging.

It is also his belief that Grayscale will soon introduce a “mini-GBTC,” which is a different and new spot Bitcoin exchange-traded fund with a substantially lower charge.

“They can have assets chopped by like 90% and still make more than all of the other issuers combined.”

Furthermore, additional bleeding may occur due to a judge’s recent approval of an order that permits the insolvent cryptocurrency lender Genesis to sell off a portion of its investments in Grayscale.

Genesis allegedly possessed around $1.6 billion worth of shares in GBTC, the Grayscale Ethereum Trust, and the Grayscale Ethereum Classic Trust as stated in the documents filed with the court.