Greyscale GBTC Bleeds AUM Drops By $5B
Outflows from Grayscale Bitcoin Trust (GBTC) as a bitcoin exchange-traded fund (ETF) surged in the first days of trading, contributing to a nearly $5 billion fall in assets under management.
Total ETF assets fell from $28.5 billion on Jan. 10 to $23.7 billion on Jan. 18, according to data from YChart and Grayscale.
Bitcoin's price decline also explains the fall in AUM. As the underlying asset of an ETF, Bitcoin's market price has a direct impact on the fund's value. At the time of writing, the price of Bitcoin (BTC) was down 4% last week, trading at $40,582, according to Cointelegraph.
When will the bleeding stop? I don't know, but that's some serious daily flow for the nine to fight every day. They've done a great job so far, but it's a lot to ask. pic.twitter.com/LqwPRETrQf
— Eric Balchunas (@EricBalchunas) January 19, 2024
They expected the outflow from GBTC. The approval of the ETF by the Securities and Exchange Commission (SEC) on January 10 allowed GBTC holders to exchange and purchase their shares for Bitcoin. Before that, investors must sell shares in the secondary market to exit positions.
Nearly $1.1 billion was drained from the grayscale ETF in three days as holders sought lower fees from grayscale rivals and took advantage of a narrow discount in the stock. Anthony Scaramucci, founder of Skybridge Capital, told Bloomberg that some GBTC investors are realizing their losses and are turning to cheaper ETF options. To illustrate the cost gap, GBTC has a 1.5% fee, while other ETFs have fees as low as 0.20% and a six-month free investment.
CoinRoutes CEO Dave Weisberger said on X that the composition of GBTC holders is playing a significant role in the outflows. With hedgers and other investors looking for discounts jumping to lower fees, panic selling may contribute to recent market moves. According to Weisberger:
“It's the issue of taxable accounts taking profits or panic selling. We don't know what % of those are or what the average entry price is for the holders.”
While GBTC faces its first storm as a spot ETF, other Bitcoin currencies are moving in a different direction. Issuers added another net 10,667 Bitcoin to their portfolios in increased activity on the fifth day of trading.
According to data from CC15Capital, approximately $440 million in net Bitcoin holdings have been added to issuers. A significant portion of this increase was attributed to BlackRock's ETF, which gained 8,700 BTC, worth approximately $358 million. Since its inception, nine ETFs (not including Grayscale) have bought nearly 68,500 BTC.
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