Grayscale’s GBTC Experiences First Inflows After Continuous Outflows

A Turnaround for Grayscale Investments Amidst a Tough Market

Grayscale Investments has marked a significant milestone with its Grayscale Bitcoin Trust (GBTC), recording its first day of net positive inflows after months of continuous outflows. This development comes as a relief to the fund, which has faced over $17.5 billion in outflows since the launch of 11 spot Bitcoin ETFs on January 11.

Details of the Inflows and Market Reaction

On May 3, GBTC saw an influx of $63 million, a notable turnaround considering the substantial outflows it has experienced since its conversion to a Bitcoin exchange-traded fund (ETF) in January. This inflow contrasts starkly with the performance of other funds; for instance, Franklin Templeton's Bitcoin ETF (EZBC) recorded its highest ever inflow of $60.9 million on the same day. Additionally, Fidelity Wise Origin Bitcoin Fund (FBTC) led the day's inflows with $102.6 million, followed by Bitwise Bitcoin Fund (BITB) with $33.5 million and Invesco Galaxy Bitcoin ETF (BTCO) with $33.2 million.

Grayscale's GBTC recorded its first day of inflows on May 3. Source: Farside

The crypto community has been actively discussing the potential impacts of these inflows on Bitcoin’s price. A pseudonymous crypto investor, DivXman, suggested to his 20,800 followers on X that GBTC had been a primary source of sell pressure across all spot Bitcoin ETFs, but now “the tides” could be turning. He noted, “That effectively means a significant decrease in sell pressure and additional increase in demand while ETFs collectively are buying more BTC than miners can create.”

Predictions and Speculations on Bitcoin's Price

Crypto trader Jelle, addressing his 80,300 followers on X, predicted that the new inflows for Grayscale’s ETF might signal the end of the "halving chop," potentially leading to Bitcoin reaching six-figure prices shortly. Moreover, trader Jordan Lindsey commented on the correlation between Bitcoin’s price movements and the fund’s inflows and outflows, noting the cryptocurrency's price had risen by 4.91% over the past 24 hours to $62,840.

Challenges Leading to Previous Outflows

Several factors have contributed to the ongoing outflows from Grayscale’s GBTC since the introduction of the new spot Bitcoin ETFs. One significant reason has been the high fees associated with GBTC, which stands at 1.5% compared to lower fees under 1% for other ETFs, with Franklin Templeton's being the cheapest at 0.19%. Additionally, the liquidation of large amounts of GBTC shares by bankrupt crypto firms like FTX and Genesis in efforts to repay creditors has also driven the outflows. On April 6, it was reported that Genesis liquidated approximately 36 million GBTC shares for $2.1 billion to purchase 32,041 Bitcoin.