The overall cryptocurrency landscape is struggling to gain momentum, possibly due to the recent significant outflows of funds from the Grayscale Bitcoin Trust (GBTC). After the approval of the spot Bitcoin Exchange Traded Fund (ETF) in the United States by the Securities and Exchange Commission, an estimated $1.1 billion has flowed from the GBTC in the last three days.
GBTC investors booking profits
The primary reason behind this significant exit is that GBTC’s investors are exiting their position as they are booking the profits. Back in early 2023 when GBTC was trading at a discounted price, investors took advantage of it by buying significantly. Currently, GBTC is near its net asset value, indicating that the discount on GBTC has narrowed.
However, looking at the recent outflow, James Seyffart, a Bloomberg ETF expert, made a post on X (previously) stating that today, on January 17, 2024, we may see a significant outflow of over $594 million. Seyffart mentioned,
“Today is likely to be a net outflow day for the bitcoin ETFs. Estimating ~$594 million left GBTC for a total of $1.173 billion in outflows. Most others saw inflows, but doubt it is enough to offset nearly $600 million out of GBTC.”
Despite inflows into other Bitcoin ETFs, it is suggested that these inflows might not be sufficient to offset the large outflow from GBTC, leading to a net negative flow of funds from Bitcoin ETFs overall. This scenario could be influenced by various factors, such as investor sentiment, market conditions, or specific developments in the cryptocurrency landscape.
As discussed earlier, according to JP Morgan, over $2.5 billion of funds moved into GBTC from January 2023 to December 2023, primarily due to the GBTC discount. JP Morgan’s report mentioned that once GBTC successfully transforms into a spot Bitcoin ETF, we may experience a short-term downtrend flow as this $2.5 billion fund outflows.
BlackRock, Grayscale, WisdomTree, Bitcoin holding
Additionally, following the conversion of GBTC into a spot Bitcoin ETF, the discount has fallen as low as 1.55%. Now, investors who locked their funds for extended periods are exiting. According to Seyffart, the estimated $1.17 billion GBTC outflow nearly equals 27,000 Bitcoin, as BTC is trading near $42,600.
Apart from Grayscale, all other spot Bitcoin ETF issuers, including the asset management giants BlackRock and Fidelity, currently hold over 35,750 Bitcoin, according to data shared by CC15Capital. However, Grayscale holds the highest number of Bitcoins (605,891), while WisdomTree holds the least (74) worth around $3.18 million.
