March 27, 2024
Fidelity's Bitcoin ETF Turns Heads: $208M Inflows Offset Grayscale's Outflows
Bitcoin ETF

Fidelity’s Bitcoin ETF Turns Heads: $208M Inflows Offset Grayscale’s Outflows

In a significant shift within the cryptocurrency investment landscape, Fidelity’s spot Bitcoin exchange-traded fund (ETF) has emerged as a frontrunner, pulling in a remarkable $208 million in daily inflows on January 29. This surge in popularity has surpassed outflows from Grayscale Bitcoin Trust (GBTC) for the first time since its inception.

According to provisional data from Farside Investors, Fidelity’s FBTC witnessed substantial inflows, overshadowing the $192 million outflows from GBTC on the same day. These outflows represent the lowest daily figure outside of GBTC’s re-launch, reflecting a nearly 25% drop from the previous high of $255 million on January 26 and a significant 70% decline from its peak outflows of $641 million on January 22.

The dwindling outflows from GBTC signal a potential shift in sentiment among investors, with many closely monitoring for indications of slowed outflows amid efforts to capitalize on once-underwater positions.

Analysts from JPMorgan highlighted on January 25 that GBTC outflows had previously exerted downward pressure on Bitcoin’s price but suggested that this trend “should be largely behind us.”

Meanwhile, data from January 29 reveals that the nine new U.S. spot Bitcoin ETFs collectively amassed a staggering $994.1 million in volume, nearly doubling that of GBTC, which recorded $570 million in volume. Notably, BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s FBTC garnered the largest volume share after GBTC, with respective daily volumes of $460.9 million and $315.4 million, constituting 78% of the combined volume of the nine new ETFs.

The intensifying competition in the spot Bitcoin ETF market has prompted issuers to slash fees in a bid to attract investors both domestically and internationally. Invesco and Galaxy Asset Management recently announced a fee reduction for their joint ETF, the Invesco Galaxy Bitcoin ETF (BTCO), lowering its eventual expense ratio from 0.39% to 0.25%. BTCO will waive fees for the first six months or until it reaches $5 billion in assets, thereafter implementing the revised lower fee structure.

This fee reduction follows a broader trend in the industry, with other ETF issuers in both the U.S. and Europe cutting fees to remain competitive. Invesco and WisdomTree slashed fees on their Europe-based Bitcoin ETFs, while CoinShares reduced fees on its flagship Bitcoin ETF, indicating a broader global shift towards more cost-effective investment options.

The ongoing fee war, coupled with Fidelity’s impressive inflows and GBTC’s declining outflows, underscores the evolving dynamics of the cryptocurrency ETF market, as investors navigate an increasingly crowded and competitive landscape.

Image: Wikimedia Commons

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