Just hours before the anticipated Bitcoin halving event, Grayscale’s Bitcoin ETF experienced a significant outflow of funds amounting to $1.6 billion. This continued a trend of withdrawals over the past five days leading up to the halving, an event that occurs every four years to regulate the scarcity of Bitcoin.
According to data compiled by SoSoValue, investors pulled out $89.9 million from Grayscale’s ETF, adding to the total net outflows of $1.6 billion since the ETF’s trading inception in January.
Meanwhile, across all ten spot Bitcoin ETFs, there were cumulative outflows of $4.3 million. Fidelity and BlackRock managed to attract demand, partially offsetting the liquidations experienced by GBTC.
Fidelity’s FBTC witnessed net inflows of $37.3 million, surpassing BlackRock’s IBIT, which saw $18.7 million in inflows. This marked a rare occurrence where BlackRock was surpassed by a competitor in the spot BTC ETF market.
Despite being the largest spot Bitcoin ETF at its launch, GBTC has seen a substantial decline in market share, losing ground to newer players like BlackRock. Over the past four months, GBTC’s assets under management (AUM) have plummeted by approximately 50%. Grayscale, with less than $20 billion in AUM, now trails behind BlackRock, which commands over $17 billion in investor demand.
Experts, including Bloomberg’s Eric Balchunas, attribute the significant withdrawals from GBTC to various factors such as ongoing bankruptcy proceedings involving entities like FTX and Genesis. Additionally, Grayscale’s high fund fee of 1.5% has also been cited as a contributing factor to the liquidations.
In response to these challenges, Grayscale CEO Michael Sonnenshein has announced plans to gradually reduce GBTC’s fees. The company is also considering launching a Bitcoin Mini Trust ETF with lower fees to regain traction in the market and attract investor demand.
