Grayscale’s GBTC Outflows Hit 7 Billion Dollars, Yet Data Indicates Deceleration

Crypto News- Grayscale, the crypto asset manager, continues to witness a slowdown in outflows from its spot Bitcoin ETF. Despite this, many analysts believe there’s still more room for these outflows to continue.

Recent data from Bianco Research and Farside indicates that the total outflow from the Grayscale Bitcoin Trust (GBTC) since its conversion to a spot Bitcoin ETF has now surpassed $7 billion as of February 16th. However, while the pace of outflow has notably reduced, experts like Nate Geraci, President of ETF Store, suggest that the bleeding may not have ceased entirely. January marked the peak of the exodus, with $5.64 billion exiting GBTC by month-end, but February has only seen $1.37 billion in outflows thus far.

Grayscale’s GBTC Outflows Hit 7 Billion Dollars, Yet Data Indicates Deceleration

Jim Bianco, founder of Bianco Research and a former Wall Street analyst, attributes much of this outflow to investors rebalancing their portfolios towards spot Bitcoin ETFs with lower fees. He notes that newer ETFs have slashed their fees to as low as 0 to 12 basis points, whereas Grayscale still maintains a fee of 150 bps. Another factor driving outflows, according to Bianco, is the significant discount at which the fund traded compared to the Bitcoin market price, approximately 44%, especially when BlackRock filed for its spot ETF in June 2023. He suggests that Grayscale’s transition to an ETF in January 2024 aimed to close this “arbitrage-type” trade as intended.

Contrarily, Geraci remains cautious, stating it’s too early to call an end to the asset bleed. He highlights Grayscale’s resilience, suggesting they could withstand a substantial reduction in assets and still surpass their competitors in earnings. He speculates that Grayscale might even consider launching a “mini-GBTC,” a new spot Bitcoin ETF with significantly lower fees. Furthermore, additional bleeding may occur following a recent court decision permitting bankrupt crypto lender Genesis to liquidate part of its investments in Grayscale, valued at around $1.6 billion across GBTC, the Grayscale Ethereum Trust, and the Grayscale Ethereum Classic Trust.