GBTC Outflows Hit $166M, ETF Inflows Decline

GBTC, the Grayscale Bitcoin exchange-traded fund (ETF), has seen a notable fund outflow totaling over $166 million or more than 2,500 Bitcoin (BTC) this past week.

Data from Farside Investors revealed that withdrawals from GBTC ETF have surpassed $16.2 billion since its debut in January. Daily outflows from this fund have varied since the start of this month, ranging between $75 million and $300 million, indicating ongoing shifts in investor sentiment.

Bitcoin ETF Performance

Inflows into spot BTC ETFs this week were the lowest to date, at $572 million, contributing to the overall negative trend in Bitcoin ETF flows.

Inflows to the 9 new bitcoin ETFs, ex. GBTC, were just $572 million this week, the worst week to date. pic.twitter.com/pMzS5gH26I

— Joe Consorti (@JoeConsorti) April 13, 2024

Despite this downturn, IBIT Bitcoin ETF, under the management of BlackRock, still boasted assets exceeding $15 billion. This success suggests that the gap between IBIT and Grayscale’s Bitcoin reserves is narrowing. Also, there’s a possibility that a notable portion of the outflows from GBTC are inflows for IBIT.

Nevertheless, Grayscale CEO Michael Sonnenshein opined that outflows from the Grayscale Bitcoin Trust would stabilize soon. While Sonnenshein’s comments could spark optimism among investors, current market conditions prove otherwise.

Reasons for GBTC Outflows

The substantial outflows from GBTC can be attributed to its hefty management fee, which is 1.5% annually, significantly higher than the 0.30% average by its competitors. Despite losing flows to rivals, Sonnenshein hasn’t been definite about whether Grayscale will reduce its management fee.

Instead, he remarked that while products like the Grayscale Bitcoin Trust initially generate excitement, they mature with time, leading to market consolidation as investors show interest in fewer offerings. Nevertheless, data from Farside revealed that GBTC outflows on Apr. 10 were $17.5 million, a new low compared to the significant outflows of $154.9 million recorded on Apr. 9.

The previous low was on Feb. 26, when GBTC saw outflows of $22.4 million. On average, GBTC has experienced daily outflows of $257.8 million over the past four months. Moreover, the recent sale of approximately 36 million GBTC shares by the bankrupt crypto lending firm — Genesis — to acquire 32,041 Bitcoin adds to the GBTC fund’s woes.