According to a report by Bloomberg Intelligence, Grayscale’s Bitcoin ETF experienced significant withdrawals worth approximately $579 million.
The size of these withdrawals is notable in the context of the broader market for Bitcoin ETFs. In contrast, other spot Bitcoin ETFs attracted nearly $819 million in investments.
This stark difference in investor behavior highlights a critical assessment of the Grayscale Bitcoin ETF’s performance following SEC approval. Initial enthusiasm, which saw trading volumes exceed $2.3 billion on the ETF’s launch day, has cooled, and these outflows signal a shift in investor sentiment.
The withdrawal trend from the Grayscale ETF is consistent with previous forecasts by analysts, who expected more than $1 billion to exit the fund in the coming weeks.
A contributing factor to these outflows may be the fund’s relatively high expense ratio (1.5%), which is the highest among U.S. Bitcoin ETFs. By comparison, other cash ETFs, including BlackRock’s IBIT and Fidelity’s FBTC, saw significant inflows of $500 million and $421 million during their early trading periods.
The SEC’s historic approval of the Bitcoin ETF last week brought a lot of positivity and optimism to the industry. However, this also raised several controversies and concerns. Experts have warned of the potential risks of Coinbase’s dominance as custodian of most ETFs.
The immediate supply shock following the SEC’s approval triggered significant volatility in Bitcoin’s value. This is because the major cryptocurrency constantly fluctuates between $41,000 and $44,000.