Is Grayscale dumping billions of dollars worth of Bitcoin? Blame the ETFs.
Bitcoin Despite the historic acceptance of spot cryptocurrency exchange-traded funds (ETFs) just seven days ago, they have taken a huge hit this week, falling more than 14%. and meGrayscale, a digital asset manager owned by cryptocurrency giant Digital Current Group, does not appear to have anything to do with this.
investor Grayscale’s Bitcoin Trust (GBTC)Bitcoin ETFs, which recently received SEC approval, are liquidating positions in droves and analysts are shocked by the scale of the selling.
Grayscale’s Bitcoin ETF Started trading Along with 10 other similar products in the past week. Previously, the trust was a closed-end fund where investors could not redeem their shares for BTC. But now with ETFs, investors are cashing out big money.
Over $500 million was cashed out in the first few days. It is said that more than $2.2 billion was withdrawn from the fund over the past five days. bloomberg data.
All other ETFs are seeing inflows. BlackRock’s iShares Bitcoin Trust (IBIT) is the winner, with current inflows of $1.2 billion.
Bloomberg’s senior ETF analyst said: decryption It was “rather shocking” to see GBTC experience such a large outflow.
When does the bleeding stop? I don’t know, but this is a serious daily leak that The Nine have to contend with every day. They’ve done a great job so far, but damn it’s a lot to ask. pic.twitter.com/LqwPRETrQf
— Eric Balchunas (@EricBalchunas) January 19, 2024
Simply put, the reason for the outflow is traders exiting their positions to take profits after previously locking in the fund.
GBTC too Highest fees It is 1.5% of U.S. spot Bitcoin ETFs. BlackRock’s IBIT is 0.12%, but increases to 0.25% after 12 months.
Industry observers say this is another reason investors may want to cash out.
Investors leaving GBTC are eventually encouraged to move and sell large amounts of BTC to Coinbase, an American cryptocurrency exchange of which Grayscale is the custodian, causing the price of Bitcoin to fall. On-chain data Arkham Intelligence It shows that Grayscale has sent roughly $500 million worth of Bitcoin to Coinbase in the last six hours alone.
James Butterfill, head of research at European asset manager CoinShares, said these outflows likely explain the decline in BTC prices.
“Further price weakness will depend on when GBTC holders stop selling,” he said. decryption The text message acknowledges that GBTC’s fees are comparatively much higher than its competitors.
Despite the leak, Grayscale said: decryption The fund was successful thanks to the enormous trading volume.
“GBTC has dominated trading volume, is a leading risk transfer vehicle, and has been the best performing of all spot Bitcoin ETFs since launch,” said John Hoffman, Managing Director of Sales and Distribution at Grayscale.