Bitcoin ETF Investments Decline While Grayscale Witnesses Historic Outflows

Crypto News- In a sign of shifting market sentiment, Bitcoin ETF activity has notably slowed as funds and institutional players exhibit less fervor for the cryptocurrency. The trend is underscored by Grayscale, the world’s largest crypto asset manager, which experienced a staggering outflow of $643 million on March 18th, surpassing its previous record set in January.

This massive outflow, equivalent to approximately 9,600 BTC according to BitMEX research, reflects a significant decline in Grayscale’s Bitcoin holdings, which have plummeted nearly 40% since the conversion of its fund to a spot ETF in mid-January. Over the past ten weeks alone, Grayscale has witnessed an exodus of around 241,830 BTC.

Bitcoin ETF Investments Decline While Grayscale Witnesses Historic Outflows

The company’s dwindling BTC reserves, now standing at 378,169 BTC compared to 620,000 BTC at the beginning of the year, signal a broader trend of investors seeking direct exposure to Bitcoin. The ability to convert shares into BTC directly, previously unavailable under the old GBTC structure, has motivated investors to pull out from Grayscale, compounded by its comparatively higher fees compared to rival ETPs.

Responding to this shift, Grayscale filed for the launch of a “Grayscale Bitcoin Mini Trust,” aiming to enhance competitiveness in the market.

Grayscale’s BTC Holdings in Continuous Decline

Furthermore, the waning interest in Grayscale is mirrored by declining inflows in other prominent funds such as Fidelity’s FBTC and BlackRock’s IBIT. Total net inflows have dipped below $200 million in recent days following a record inflow of over $1 billion on March 12th.

Despite the hype surrounding Bitcoin ETFs, portfolio allocations remain relatively low. Grant Engelbart, vice president and investment strategist at Carson Group, revealed that only a “handful of advisors” are allocating an average of 3.5% of Bitcoin ETFs to client portfolios. ETF analyst Eric Balchunas corroborated this observation, noting that interest primarily stems from early adopters rather than widespread adoption among advisors’ clients.

As Bitcoin prices continue to slide, dropping 5% to $65,100 at the time of writing and correcting 12% from its recent all-time high, the subdued activity in Bitcoin ETFs reflects a cautious approach among investors amidst market volatility.