Turnaround for Grayscale investment in a difficult market
Grayscale Investments has hit a significant milestone by recording its first net inflows into the Grayscale Bitcoin Trust (GBTC) after months of continuous outflows. The development comes as a relief to the fund, which has faced outflows of more than $17.5 billion since the launch of 11 spot Bitcoin ETFs on January 11.
Inflow details and market reaction
GBTC recorded inflows of $63 million on May 3, a notable turnaround considering the significant outflows it has experienced since converting to a Bitcoin exchange-traded fund (ETF) in January. These inflows contrast sharply with the performance of other funds. For example, Franklin Templeton’s Bitcoin ETF (EZBC) recorded its highest ever inflow of $60.9 million on the same day. Additionally, Fidelity Wise Origin Bitcoin Fund (FBTC) led the day’s inflows with $102.6 million, followed by Bitwise Bitcoin Fund (BITB) with $33.5 million and Invesco Galaxy Bitcoin ETF (BTCO) with $33.2 million.
The cryptocurrency community has been actively discussing the potential impact these inflows will have on the price of Bitcoin. Anonymous cryptocurrency investor DivXman suggested to his 20,800 “This means that while ETFs are collectively purchasing more BTC than miners can generate, selling pressure is greatly reduced and demand is further increased,” he said.
Bitcoin price predictions and speculations
Crypto trader Jelle, speaking to his 80,300 followers on Trader Jordan Lindsey also commented on the correlation between Bitcoin’s price movements and the fund’s inflows and outflows, noting that the price of the cryptocurrency rose 4.91% in the last 24 hours to $62,840.
GBTC inflows are $63 million. What does this mean?
Grayscale Bitcoin Trust $GBTC It was a major source of selling pressure across all spot markets. #Bitcoin ETF after listing in January 2024.$GBTC Major outflows throughout the year were caused by a number of factors, the most obvious being… pic.twitter.com/A0qDzGbuNh
— DivXMaN (@crypto_div) May 3, 2024
Challenges leading to previous leaks
Several factors have contributed to the continued outflows from Grayscale’s GBTC following the introduction of the new spot Bitcoin ETF. One important reason is the high fees associated with GBTC, which amounts to 1.5% compared to less than 1% for other ETFs, with Franklin Templeton having the lowest fees at 0.19%. Additionally, the outflow of funds was driven by the liquidation of large amounts of GBTC stock by bankrupt cryptocurrency companies such as FTX and Genesis to repay creditors. On April 6, it was reported that Genesis liquidated approximately 36 million GBTC shares to purchase 32,041 Bitcoins for $2.1 billion.