Crypto asset manager Grayscale has continued to see a slowdown in outflows from its spot Bitcoin ETF — though observers believe there’s still room for further bleeding.
According to data from Bianco Research and Farside, the total outflow of funds from the Grayscale Bitcoin Trust (GBTC) since it converted to a spot Bitcoin (BTC) ETF reached $7 billion on Feb. 16. However, while the rate of outflow has slowed considerably, observers, including ETF Store President Nate Geraci, say the bleeding may not be over.
GBTC has $7bil outflows in past 5 weeks…
What a chart.
Outflows clearly slowing.
Interested to see what happens moving forward.
Play for Grayscale IMO is to launch “mini-GBTC” (spot bitcoin ETF at significantly lower fee). SPDR did this w/ GLD & GLDM.
via @biancoresearch pic.twitter.com/NrZnqzUiAi— Nate Geraci (@NateGeraci) February 19, 2024
While January saw the largest portion of the exodus, with $5.64 billion leaving GBTC by the end of the month, February has only seen $1.37 billion in outflows so far.
In a Feb. 18 post on X, Bianco Research founder and former Wall Street analyst and commentator Jim Bianco believes that much of the outflow is due to investors rebalancing their portfolios and shifting to spot Bitcoin ETFs with lower fees.
He added that the newly launched batch of ETFs has cut their fees to between 0 and 12 basis points, whereas Grayscale still charges 150 bps.
Bianco offered another reason for the continued outflow from GBTC: the fund traded at a substantial discount to the BTC market price — a roughly 44% discount to Bitcoin — when BlackRock filed for its spot ETF in June 2023.
“A lot of money flows into ‘cheap’ BTC,” he said, adding:
Meanwhile, Geraci believes that it’s still early and that the “asset bleed will continue.”
He also believes that Grayscale may next launch a “mini-GBTC,” a separate and new spot Bitcoin ETF at a significantly lower fee.
Related: Big banks are nudging the SEC for a slice of sweet Bitcoin ETF action
Further bleeding could also come after a judge recently signed off on an order allowing bankrupt crypto lender Genesis to sell off part of its investments in Grayscale.
According to court documents, Genesis held around $1.6 billion worth of shares in GBTC, the Grayscale Ethereum Trust and the Grayscale Ethereum Classic Trust.
Magazine: Bitcoin ETF guru Eric Balchunas has the last laugh at doubters: X Hall of Flame