Gray Area Bitcoin ETF ‘Halfs’ Before BTC Declines

Major Bitcoin (BTC) investor Greyscale Investments has dropped its BTC exchange-traded fund (ETF) holdings by 50% ahead of the expected Bitcoin halving event.

Bitcoin holdings in the Greyscale Bitcoin Trust ETF (GBTC) halved from 619,220 BTC on the first day of trading on January 11.

According to GBTC data, the spot Bitcoin ETF held 309,871 BTC on the 66th day of trading on April 16, down 50% from its early trading levels. At the time of writing, the amount is 19.7 billion dollars.

The GBTC “halving” came two days before the highly anticipated Bitcoin halving, which will reduce the mining reward by 50% from 6.25 BTC to 3.125 BTC.

Once every four years or once every 210,000 blocks, the Bitcoin halving is a major event and is often associated with ongoing rallies in the crypto market.

The two events aren't related, but they do create another coincidence in the chronology of Bitcoin-related events.

GBTC has been experiencing a massive selloff since its first day of trading, which has had a significant impact on Bitcoin's price.

Since GBTC had the highest fee of 10 Bitcoin ETFs in the United States, the flow was attributed to high trading fees – 1.5% per trade start. Most Bitcoin ETFs keep their fees low to increase competitiveness, setting transaction commissions between 0.2% and 0.4%.

Related: GBTC fees fall as Bitcoin ETFs ‘start to mature' – Grayscale CEO

GBTC's biggest competitor, BlackRock, iShares Bitcoin Trust (IBIT), offers a fee of 0.25% at the start of trading, excluding a 0.12% discount for the first $5 billion of assets sold at the time of termination.

BlackRock's spot Bitcoin ETF attracted more inflows, with holdings growing more than 10,000% from just 2,621 BTC to 272,548 BTC on April 16. BlackRock's IBIT is now 13% away from reaching GBTC holdings.

Despite the rapid growth, IBIT was unable to absorb the GBTC flow of 309,349 BTC. However, along with eight other issuers, the spot Bitcoin ETF provider has accumulated 224,552 BTC, excluding GBTC, since the start of trading.

In the year As of April 16, 2024, the 10 spot Bitcoin ETFs held around 862,162 BTC, worth $54.7 billion.

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