Grayscale’s GBTC Sees $643M Outflow in a Day as Bitcoin Price Drops Below $65K

According to data compiled by BitMEX research, Grayscale’s spot Bitcoin (BTC) exchange-traded fund (ETF), GBTC, experienced a net outflow of approximately $643 million on March 18 as Bitcoin price continues to drop. This marked the biggest single-day loss since Grayscale converted its trust to a spot Bitcoin ETF on January 11.

Concurrently, Fidelity’s Bitcoin ETF—the second-largest fund—also experienced a downturn, recording its lowest inflow at $5.9 million, according to data from Farside Investors. Both led to a total outflow for spot BTC ETFs of $154.3 million. iShares BTC ETF (IBIT) saw the largest inflow, totalling $451.5 million, while the remaining products had an inflow of around $36.7 million.

Bloomberg Intelligence ETF analyst Eric Balchunas said it is the “biggest outflow for GBTC thus far.”

Biggest outflow for GBTC thus far https://t.co/g6wdrTPOhE

— Eric Balchunas (@EricBalchunas) March 18, 2024

At the time of publication, the price of BTC was trading at $63,413, down 14.06% from its latest all-time high of $73,797, which it notched on March 14. Analysts attribute this market behaviour to various factors, such as the imminent Bitcoin halving event and the upcoming US Federal Reserve FOMC meeting on March 20.

Despite the declining bull run, some analysts remain optimistic about the future of Bitcoin ETF flows. Grant Englebart, the vice president of the investment company Carlson Group, told Bloomberg TV that few of his investment company’s advisers’ clients had invested in Bitcoin ETFs. Out of all the funds allocated to these investments, only an average of 3.5% was actually invested.

Balchunas said:

“Advisors are not yet soliciting the rest of their clients. All these flows are from inbound traffic.”

He mentioned that investments in BTC ETFs could continue to increase over time. Other commentators are also optimistic about long-term ETF flows because GBTC still holds a significant amount of Bitcoin, approximately 368,000.

GBTC’s Tremendous Outflows Continue

According to Bloomberg data, GBTC saw significant outflows, with $7.4 billion leaving during its first 31 trading days. This trend sharply differs from other newly launched spot Bitcoin ETFs, which have experienced net inflows. 

This notable exit may be due to its high management fee of 1.5%, while competitors charge less than 0.3%. Moreover, firms such as Genesis Global Holdco LLC, amidst bankruptcy, have been selling off their GBTC holdings.

Bitcoin analyst HODL15Capital reports that after today’s outflows, GBTC has lost 250,600 BTC since its ETF conversion. The total BTC holdings have decreased from 620K BTC to 368K BTC, indicating a significant reduction of 40%.