In simple terms, over the past five days, investors have been withdrawing money from Bitcoin ETFs in the US market, suggesting a decline in confidence or interest. Yesterday saw a withdrawal of approximately $4.38 million from spot Bitcoin ETFs and an impressive $89.99 million from Grayscale’s GBTC fund, contributing to its record total outflow of around $16.6 billion.
GBTC OutFlows Refuse to Stop
Since the launch of the Grayscale Bitcoin ETF (GBTC) on January 24, over 50% of the company’s Bitcoin holdings have been drained away through outflows. However, GBTC supporters remain optimistic that these outflows will eventually decrease. They believe that more than half of the fund’s remaining assets are currently trapped in taxable accounts.
Analysts argue that investors holding GBTC are seldom inclined to sell, thus avoiding significant tax liabilities, unless they plan to completely abandon their Bitcoin investments. As expressed by Ryan Selkis, a previous executive of GBTC’s parent company DCG, “investors are reluctant to let go of their GBTC holdings and face substantial tax bills unless they intend to fully withdraw from the Bitcoin market.”
In simpler terms, purchasing another Bitcoin ETF while also enduring a 30% tax penalty on previous capital gains to save only 1% in annual fees is an unattractive proposition for anyone.
In the past, it was announced that distressed companies such as FTX and Genesis, among others, had been offloading their GBTC holdings. The significant management fees associated with GBTC have been identified as a significant contributor to this ongoing trend. Grayscale CEO Michael Sonnenshein has indicated his intention to lower these fees, but has yet to specify a timeline for doing so.
BlackRock and Others Keep the Momentum Gain
Over the past 70 consecutive days, BlackRock’s IBIT Bitcoin ETF has seen substantial inflows, totaling approximately $15.4 billion as of Thursday, April 18, when the daily inflow reached $18.7 million. Meanwhile, GBTC, the Grayscale Bitcoin ETF, has experienced significant outflows.
In contrast, Fidelity’s Bitcoin spot ETF, FBTC, saw the largest inflow of funds among its peers in this category, amounting to $37.39 million.
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2024-04-19 13:11