Grayscale, the world’s largest crypto asset manager, has seen a significant decline in its Bitcoin (BTC) holdings following the conversion of its Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF) in mid-January.
Data from BitMEX Research indicates that GBTC has experienced 36 consecutive days of outflows as of March 4, with 5,450 BTC, equivalent to approximately $368 million, exiting the trust during this period. Since the ETF conversion, total outflows have reached a staggering $9.26 billion.
Prior to the ETF conversion, Grayscale reportedly held around 620,000 BTC. The introduction of the spot Bitcoin ETF by Grayscale allowed investors to redeem their shares for Bitcoin, a feature not available in the previous structure. Additionally, GBTC’s higher fees compared to other ETFs, such as BlackRock’s IBIT and Fidelity’s FBTC, may have contributed to the outflows.
Currently, the GBTC fund holds 420,682 BTC, estimated to be worth around $28.8 billion based on current prices. Market observers have speculated about when the “Bitcoin bleed” in GBTC might cease. While outflows slowed in late January and February, some analysts believed they could be nearing their conclusion. However, bankruptcy courts permitting crypto lender Genesis to liquidate approximately $1.3 billion worth of GBTC shares in mid-February complicated the situation.
Analysts had previously suggested that outflows would likely stop once GBTC experienced a 25% reduction in outstanding shares. However, a poll indicated that most respondents expected the bleed to end in the range of 35-50%.
In contrast, the other nine spot Bitcoin ETFs have seen consistent inflows amid the ongoing Bitcoin rally. On March 4, data revealed the second-largest volume day for these ETFs, with approximately $5.5 billion in volume. BlackRock’s IBIT fund alone had a daily volume of around $2.4 billion, with assets under management surpassing $11 billion.
Each of the new ETFs has witnessed a volume increase of over 30% in just six days, contributing to the continued flow of funds. Fidelity experienced record inflows on March 4, with preliminary data indicating $404.6 million in inflows, offsetting the GBTC outflows.
The Bitwise Bitcoin ETF (BITB) also performed well, attracting $91 million in inflows, its highest since February 15. These strong inflows in spot Bitcoin ETFs have further propelled the price of BTC higher, with the cryptocurrency nearing its all-time high of $68,789 recorded in November 2021. Additionally, Bitcoin’s surge has lifted other crypto tokens, including meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB).
