Higher-cost existing crypto fund issuers in the United States have experienced outflows totaling $2.9 billion since the introduction of new spot bitcoin exchange-traded funds on January 11, as reported by CoinShares in their latest analysis.
Spot Bitcoin ETFs draw 4 billion Dollars in inflows
The primary contributor to these outflows has been Grayscale’s GBTC, with over $2.8 billion leaving the fund. This significant exodus can be attributed to its 1.5% fees and likely profit-taking, especially after converting to an ETF following years of trading at a discount to net asset value (NAV). (The discount to NAV indicates how much lower the market price of each share is compared to the value of the bitcoin it represents.)
Fees for Grayscale’s converted fund and other incumbents like ProShares’ bitcoin futures ETF (BITO) at 0.95% are notably higher than those offered by the new spot bitcoin ETF products. Many of these new ETFs come with reduced or zero initial fees and permanent fees ranging between 0.2% and 0.5%.
Despite the outflows from higher-cost funds, the recently launched spot bitcoin ETFs have more than compensated for the losses, attracting a total of $4 billion in inflows, or $1.2 billion net of Grayscale’s converted fund, since their launch.
Slight outflows observed last week amidst a surge in trading volumes
Digital asset investment products experienced marginal outflows totaling $21 million last week, driven primarily by net outflows of $25 million from bitcoin-based funds. James Butterfill, Head of Research at CoinShares, noted that some investors viewed the recent price decline as a chance to increase their positions in short-bitcoin investment products, resulting in $13 million in inflows. The price of Bitcoin (BTC) has dipped approximately 5% over the past week, reaching $40,900, according to The Block’s price page.
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