Following the U.S. authorization of spot Bitcoin ETFs (Exchange Traded Funds), the cryptocurrency market, especially Bitcoin, witnessed significant gains. This approval notably affected Grayscale’s Bitcoin Trust (GBTC), which saw its Bitcoin holdings decrease by half within three months of the ETF’s launch.
Grayscale’s Bitcoin Trust began with approximately 619,220 BTC when spot Bitcoin trading was initiated. This occurred around the time when leading asset management firms like BlackRock and Fidelity launched their own ETFs. Unlike these competitors, which charge a management fee of 0.12%, GBTC’s higher fees contributed to a sharp reduction in its holdings to about 311,621 BTC, as recent reports from the fund indicate.
Despite a 50% drop in Bitcoin holdings, the value of GBTC’s assets under management in U.S. dollars fell by only 31%, from $28.7 billion on January 11, 2024, to $19.8 billion at present. In terms of market share by Bitcoin holdings, GBTC’s share has dropped from nearly 100% at launch to 37.3%. In contrast, BlackRock’s IBIT now holds a 32.2% share, while Fidelity’s FBTC is at 17.8%.
Currently, all U.S. spot bitcoin ETFs collectively hold around 840,000 BTC, which is over 4% of the total Bitcoin supply of 21 million.
The geopolitical tensions between Iran and Israel have also impacted the spot Bitcoin ETF market. Over the last two trading days, only BlackRock’s IBIT and Grayscale’s GBTC have seen notable trading activity. Specifically, IBIT recorded inflows of $73.4 million on April 15, 2024, whereas GBTC saw outflows of $110.1 million, culminating in a net outflow of $36.7 million for the day.
This recent trading pattern includes a series of losses for GBTC, with $82.5 million withdrawn from the fund over the past week. Nonetheless, since the inception of spot Bitcoin ETFs, the net inflows have reached $12.5 billion.
According to James Butterfill, CoinShares’ Head of Research, the pause in positive price trends has introduced uncertainty among investors. While FBTC’s 63-day streak of inflows ended last Friday, IBIT’s inflow streak continues, now reaching 65 days.
Not a financial advice.