As a researcher with extensive experience in the cryptocurrency market, I was taken aback by Grayscale Bitcoin Trust’s (GBTC) sudden reversal of fortune and recording its first-ever inflow since its launch. The $17.46 billion in outflows that GBTC had witnessed prior to May 3 was a stark contrast to the recent influx of approximately $378.3 million on that day.
As an analyst, I’m surprised to report that Grayscale Bitcoin Trust (GBTC) experienced its initial influx of investments following a prolonged period of daily outflows since its inception.
Grayscale Bitcoin ETF Records Over $60 Million In Inflows
The Grayscale Spot Bitcoin ETF, launched on January 11, 2024, experienced its initial inflow of funds on May 3, following significant outflows amounting to around $17.46 billion over the preceding 82 days. In simpler terms, after 82 consecutive days of investors withdrawing their money from the Grayscale Spot Bitcoin ETF since its launch, there was a reversal on May 3 with new investments being made.
Based on Farside’s findings as an investment management company, the Grayscale Spot Bitcoin ETF attracted approximately $63 million in investments, while BlackRock’s iShares Bitcoin Trust (IBIT) gained around $12.7 million in inflows.
Approximately $378.3 million flowed into accounts on that day in total, with Franklin Templeton’s EZBC Spot Bitcoin ETF contributing the largest inflow at around $102.6 million.
Surprised by Grayscale’s sudden change of direction, Eric Balchunas, senior analyst and ETF expert at Bloomberg, felt compelled to double-check the information to ensure its accuracy.
As a researcher studying the cryptocurrency market, I’ve discovered an intriguing development: following a significant event where US Spot Bitcoin ETFs, including BlackRock’s IBIT, collectively experienced large outflows totaling over $563.7 million in a day. This mass withdrawal might have been instigated by the Federal Reserve’s (FED) announcement to maintain interest rates as is, which subsequently led to a broader market downturn for cryptocurrencies.
I’ve noticed that BTC went through considerable drops around the same timeframe. However, presently, Bitcoin has surged by 6.36% within the last 24 hours, breaking past the crucial $60,000 resistance level and reaching a price of $63,175 as per CoinMarketCap.
Factors Behind GBTC’s Massive Outflows
Since its founding, Grayscale has witnessed significant daily outflows totaling hundreds of millions, with the first recorded inflow marking a recent shift in trend. Notably, Grayscale’s Spot Bitcoin ETF experienced its largest outflow to date, amounting to approximately $589.9 million on February 29.
Several elements have led to GBTC experiencing daily outflows, one of which is its high annual management fee of 1.5%, which is significantly more than the fees charged by other 12 Spot Bitcoin ETFs in the US. Notably, Grayscale’s fee surpasses that of BlackRock, the second largest provider of BTC ETFs in the US, whose average annual management fee stands at a comparatively lower 0.25%.
As a crypto investor, I’ve noticed that Grayscale experienced some outflows, which were partially attributed to reported selling connections with troubled crypto exchanges and defunct companies in the industry. Specifically, FTX, a distressed exchange, sold approximately $1 billion worth of GBTC shares. Additionally, Genesis, an institutional cryptocurrency brokerage, purchased over 32,041 BTC, valued at more than $2.1 billion, by selling nearly 36 million GBTC shares.
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2024-05-05 03:12