March 27, 2024
Grayscale's Bitcoin ETF Market Share Drops to 50%
Bitcoin ETF

Grayscale’s Bitcoin ETF Market Share Drops to 50%

Grayscale, a prominent crypto asset manager, is witnessing a significant shift in its spot Bitcoin (BTC) exchange-traded fund (ETF) market share. For the first time since the inception of spot Bitcoin ETFs in the United States on Jan. 11, Grayscale’s ETF has fallen below 50% market share. As of March 12, the total assets under management (AUM) in Grayscale Bitcoin Trust (GBTC) have plummeted to $28.5 billion, representing 48.9% of the total $56.7 billion held among ten U.S. Bitcoin ETFs, according to data from Dune Analytics.

Grayscale’s GBTC fund accounts for less than 50% of the total Bitcoin ETF AUM. Source: Hildobby on Dune Analytics

Initially, Grayscale’s fund dominated the market, accounting for around 99.5% of the total AUM on the first trading day of the ten U.S. spot Bitcoin ETFs. Consistent daily outflows from GBTC, averaging $329 million last week, have gradually diminished its market share. Particularly, within the inaugural month of Bitcoin ETFs, GBTC outflows peaked, totaling $7 billion in slightly over a month.

Although outflows slowed in late January, they picked up again in mid-February when bankruptcy courts permitted crypto lender Genesis to liquidate approximately $1.3 billion worth of GBTC shares to reimburse investors. Overall, GBTC outflows have surpassed $11 billion to date.

Originally, Grayscale’s ETF functioned as a trust allowing institutional investors to access Bitcoin by locking up funds for at least six months. However, after a court victory over the Securities and Exchange Commission (SEC) in August, the trust was converted into an ETF following the regulator’s approval of other spot Bitcoin ETF applications. This conversion enabled institutional investors to capitalize on GBTC arbitrage trades, leading them to withdraw their capital from the fund or transfer their assets to Bitcoin ETFs with lower fees.

Solid Bitcoin ETF inflows have been credited with driving the price of Bitcoin higher. Source: Farside Investors

Despite concerns over increasing outflows from GBTC, optimism arises from growing net inflows into BlackRock’s iShares Bitcoin ETF (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC). These two funds have collectively generated $16.9 billion worth of inflows since inception.

Market commentators attribute the growing inflows into the nine newly launched ETFs as a fundamental driving factor behind the rapid appreciation in Bitcoin’s price. On March 11, Bitcoin reached a new all-time high of $72,900. BlackRock’s fund currently holds over 200,000 BTC, valued at approximately $14.3 billion at current prices, according to K33 Research data.

BlackRock’s IBIT ETF now holds more than 200,000 Bitcoin in AUM. source: Vetle Lunde on

This shift in market dynamics underscores the evolving landscape of Bitcoin investment vehicles, with ETFs gaining traction among institutional investors seeking exposure to the digital asset.

Image by Tamim Tarin from Pixabay

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