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Grayscale's Bitcoin ETF Sees $1.6 Billion Outflow Ahead of Halving

Jack Evans
Apr 19, 2024 at 09:02 pm

Grayscale's spot Bitcoin ETF, the GBTC, experienced a notable $89.9 million outflow according to SoSoValue data, culminating in a staggering $1.6 billion in net outflows since its January debut. This trend unfolded over a five-day period leading up to the halving, an event designed to preserve the scarcity of Bitcoin through a code adjustment occurring every four years.

Interestingly, while Grayscale faced substantial liquidations, other players like Fidelity and BlackRock saw contrasting fortunes. Fidelity's FBTC witnessed $37.3 million in net inflows, outpacing BlackRock's IBIT with $18.7 million, marking a rare event where BlackRock was outdone by a competitor for spot BTC ETF inflows on April 18.

Despite being a pioneer with a decade-long headstart, GBTC has seen its market dominance erode rapidly. The asset under management (AUM) for Grayscale has plummeted by 50% in just four months of trading, contrasting sharply with BlackRock's impressive $17 billion investor demand in the same space.

Experts, such as Bloomberg's Eric Balchunas, attribute the substantial GBTC outflows to ongoing bankruptcy proceedings like FTX and Genesis, as well as Grayscale's relatively high fund fee of 1.5%, which has likely driven liquidations.

In response to these challenges, Grayscale's CEO Michael Sonnenshein has unveiled plans to gradually reduce GBTC fees and introduced the idea of a Bitcoin Mini Trust ETF aimed at lowering costs and revitalizing market demand.

As the cryptocurrency landscape evolves, Grayscale's Bitcoin ETF is navigating turbulent waters, facing pressure from competitors and market dynamics. With strategic adjustments in fees and product offerings, Grayscale aims to regain its footing and capture renewed interest in the expanding digital asset market.

Read More: Bitcoin Halving 2024: Insights and Predictions from Komodo CTO

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