Grayscale’s Bitcoin ETF Witnesses Significant Outflows

1. Grayscale’s Bitcoin ETF witnesses $358.8 million in outflows on March 21, a total of $1.8 billion outflows for the week.
2. Analysts predict a potential downturn in outflows, attributing much of the recent exodus to bankruptcies of crypto firms.
3. Ryan McMillin from Merkle Tree Capital anticipates GBTC’s outflows to “settle within the next week or two,” a positive outlook amidst increasing competition from other spot Bitcoin ETFs.

Grayscale’s Bitcoin exchange-traded fund (ETF) experienced another substantial day of outflows, with nearly $359 million exiting the fund on March 21. This follows a week of massive outflows, including a record-breaking $642 million on March 18, according to Farside Investors data.

Despite the ongoing outflows, analysts believe the trend may soon come to a halt. Senior Bloomberg ETF analyst Eric Balchunas speculates that much of Grayscale’s outflows could be nearing their end.

This is attributing them primarily to bankruptcies of crypto firms. Balchunas suggests that once this phase concludes, only retail investors will remain. Further, resulting in a trickle of flows similar to February’s levels.

Insights into Outflow Dynamics

Grayscale’s Bitcoin Trust (GBTC) has seen a total of $1.8 billion in outflows this week. Moreover, this is marking the fourth consecutive day of net outflows across all 10 Bitcoin ETFs.

However, as of March 21, Grayscale reported $23.2 billion in assets under management for its Bitcoin Trust. Since its conversion to an ETF on January 11, GBTC has shed $13.6 billion.

Pseudonymous independent researcher ErgoBTC suggests that a significant portion of recent outflows, totaling approximately $1.1 billion, may stem from bankrupt crypto lender Genesis. This hypothesis is supported by the timing and volume of fund movements between GBTC and Genesis.

Ryan McMillin, chief investment officer at crypto fund manager Merkle Tree Capital, anticipates that GBTC’s outflows will “settle within the next week or two.”

This prediction offers a glimmer of hope for Grayscale amidst increasing competition from other spot Bitcoin ETFs launched by Wall Street giants like BlackRock and Fidelity. This offer lower fees compared to GBTC’s 1.5% management fee.

Grayscale’s Response and Market Dynamics

Grayscale CEO Michael Sonnenshein recently hinted at a reduction in fees over time, acknowledging the competitive pressure from rival funds. Additionally, Grayscale’s filing for a new spot Bitcoin ETF with lower fees reflects its strategic response to the ongoing outflows and evolving market dynamics.

Grayscale’s Bitcoin ETF continues to experience significant outflows, raising concerns amidst increasing competition and fee pressure. However, analysts anticipate a potential slowdown in outflows in the coming weeks, offering a ray of hope for Grayscale as it navigates through evolving market dynamics.