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After Genesis Sale Approval Bump, Grayscale Bitcoin Trust Sell-Off Slows

source-logo  decrypt.co 26 February 2024 22:00, UTC
Outflows from the Grayscale Bitcoin Trust (GBTC) have cooled off again after a brief spike in sales last week, reaching new lows since the fund officially converted into an ETF in January.

On Friday, U.S. Bitcoin spot ETFs saw $232.2 million of net inflows, which included $44.2 million of outflows from GBTC. This followed a day of only $55.7 million of outflows on Thursday, both marking the lowest daily outflows from Grayscale in the past 45 days.

Bitcoin ETF Flow - 24 Feb 2024

All data now in, except perhaps for the Galaxy/Invesco product

Friday was a strong day, with +$232.3m of net inflow. Also, the outflow for GBTC was just $44m, lowest level since 11th Jan pic.twitter.com/1Q0OtjEJLt

— BitMEX Research (@BitMEXResearch) February 24, 2024

Grayscale’s fund has suffered non-stop losses after converting into an ETF on January 11, now totaling $7.4 billion. Since GBTC charges a much higher management fee than rival funds controlled by BlackRock and Fidelity, new investors have little reason to buy into Grayscale for Bitcoin exposure, particularly for long-term HODLing.

Many pre-existing investors in Grayscale also sold their holdings immediately after ETFs went live, cashing out on significant arbitrage between the value of GBTC shares and the fund’s underlying Bitcoin. Combined with sell pressure from the FTX bankruptcy, outflows from the funds totaled more than $500 million per day before slowing towards the end of January.

Once Grayscale outflows slowed down, the price of Bitcoin surged in the following weeks to $52,000 before halting again—met by another strong wave of GBTC withdrawals. For five straight trading days until last Wednesday, daily outflows from the funds exceeded $100 million.

Though the entities selling the ETF are unclear, a likely suspect is Genesis, the bankrupt crypto lender approved to sell $1.6 billion in GBTC shares earlier this month. If or when the company’s liquidation period ends, it could eventually prove bullish for Bitcoin ETF net flows and Bitcoin’s price overall.

On Monday, the price of Bitcoin broke past resistance around $53,000, reaching a price of $54,500 at time of writing.

Grayscale’s largest rival, BlackRock, meanwhile broke a daily trading volume record for its Bitcoin ETF, surpassing $1 billion and placing it within the top 11 ETFs for volume overall.

“$1b/day is big boy level volume, enough for (even big) institutional consideration,” wrote Bloomberg ETF analyst Eric Balchunas of the development.

MILESTONE $IBIT has traded $1b worth of shares today so far.. which ranks it 11th among all ETFs (Top 0.3%) and Top 25 among stocks. Insane number for newbie ETF (esp one w ten competitors). $1b/day is big boy level volume, enough for (even big) institutional consideration. pic.twitter.com/1vxW5jhaXT

— Eric Balchunas (@EricBalchunas) February 26, 2024