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GBTC's Mixed Fortune: 54% Market Share in ETF Trade Volume Accompanied by $2 Billion BTC Exodus

Over a span of six days in the U.S. market, nine newly launched spot bitcoin exchange-traded funds (ETFs), along with the recently revamped GBTC, collectively saw a trading volume of $16.53 billion. GBTC, commanding the majority of this trade volume, experienced a substantial reduction in its bitcoin holdings. In just the past 24 hours, the trust shed over 14,300 bitcoin, decreasing its total holdings to 566,973 bitcoin.

$2 Billion in Bitcoin Depart Grayscale’s GBTC Since Jan. 12

GBTC, now recognized as a spot bitcoin ETF, maintains a considerable reserve of bitcoin (BTC). Since transitioning into a publicly traded ETF, the trust has experienced notable outflows. On Thursday, GBTC’s holdings decreased by 10,823.86 BTC, and following the trading sessions on Friday, the fund saw a further reduction of 14,300.52 BTC. Cumulatively, since Jan. 12, 2024, the trust has seen an outflow of 50,106.59 BTC, valued at slightly above $2 billion, from its reserves.

Several factors contribute to the intense selling of GBTC. Initially, GBTC shareholders might have felt constrained when the shares, initially trading at a premium to their net asset value (NAV), abruptly transitioned to a discount. This discount began in February 2021 and persisted almost until the onset of this year. Long-term investors might have been biding their time, waiting for an opportunity to sell once the discount narrowed. Additionally, investors who speculated that the discount would diminish and bought GBTC at a lower price may now be offloading their shares for substantial gains.

Another possible reason for the sell-off is that some investors in GBTC are exploring alternatives with more competitive management fees, given that Grayscale’s GBTC has the highest fees in its category. On the other hand, Grayscale’s bitcoin trust has seen the highest volume out of all nine newly launched ETFs with $8.97 billion of the $16.53 billion aggregate. This means GBTC trades accounted for 54.26% of all the trading action spot bitcoin ETFs recorded.

Before the mass approvals on Jan. 11, 2024, the prevailing narrative largely centered on the expected inflows, with little attention paid to potential outflows from GBTC. However, a modest semblance of equilibrium has emerged, as IBIT and FBTC now possess a combined total of 53,479 BTC, slightly surpassing the outflows GBTC experienced since Jan. 12.

Additionally, the cluster of ETFs vying with GBTC, IBIT, and FBTC have also witnessed growth in their BTC reserves, though not even close to a striking extent. Despite IBIT and FBTC holding significant amounts of bitcoin, these funds, along with the seven other ETFs, remain substantially smaller in comparison to GBTC’s vast reserve of hundreds of thousands of bitcoin.