Monday witnessed a deluge of investments into U.S. Bitcoin ETFs, coinciding with a resurgence of Bitcoin’s value surpassing $43,000.
Ten newly launched spot ETFs, including the Grayscale Bitcoin Trust (GBTC), collectively attracted a significant $255 million in net flows on January 11. Remarkably, this figure incorporates GBTC, which, despite being the oldest and largest ETF among them, has witnessed consistent massive outflows daily.
On Monday, BitMEX Research reported that Grayscale experienced a notable outflow of funds, amounting to $191.7 million. This figure reflects a noteworthy decrease compared to the previous week, wherein the fund’s assets witnessed a substantial loss of $640 million.
In terms of contrast, the influx of funds into the Fidelity Wise Origin Bitcoin Trust (FBTC) surpassed that of Grayscale, totalling a substantial $208.2 million in net flows.
Bitwise and Ark’s ETFs soaked in a total of $37.2 million, whereas BlackRock’s iShares Bitcoin Trust (IBTC) clinched a very close second position by accumulating flows worth $198.4 million.
As of Tuesday, American Bitcoin ETFs have accrued a substantial $1.01 billion in net flows overall. Surpassing the assets under management of silver ETFs, these ETF providers now claim a significant spot in the hierarchy, positioning Bitcoin as the second largest commodity within the realm of ETFs, trailing only behind gold.
Grayscale Outflows Slow Down
Grayscale’s former ownership of Bitcoin, valued at more than $5 billion, has been depleted; however, the pace at which it is losing these assets seems to have decreased. According to experts, this can be attributed to some initial customers taking the opportunity to sell their shares and convert them into Bitcoin when the value of Grayscale’s shares regained equality with its underlying BTC holdings.
FTX, a crypto exchange that has hit rock bottom financially, played a significant role in the recent market decline. Their actions involved offloading a substantial amount of GBTC shares, resulting in a $900 million transaction. This occurred as the fund completed its transition from being just a trust to becoming an exchange-traded fund (ETF).
The dwindling size of the fund serves as an additional indication that the tumultuous period of sales has concluded, as IBIT’s trading volume closely matches that of GBTC for two uninterrupted trading days this week. In terms of Bitcoin spot ETFs, a substantial sum of $806 million in trading volume was managed on Tuesday. Astonishingly, this total includes an impressive $350 million from Grayscale and BlackRock’s funds combined.
Many investors are transferring their funds from Grayscale, which charges a high management fee of 1.5%, to BlackRock due to the latter’s significantly lower fee of only 0.1%.
The compactness of a thumb-sized storage device can effectively hold a staggering $100 million worth of bitcoin, according to the CEO of Bitwise, Matt Hougan. He highlighted the attractive aspect of Bitcoin ETF’s economic charges by affirming that being inherently digital brings forth numerous benefits.
Frequently Asked Questions:
What led to the substantial increase in daily investments in Bitcoin ETFs?
Bitcoin’s resurgence above the $43,000 mark on Monday led to U.S. Bitcoin ETFs receiving a remarkable $255 million influx daily.
What part did the Grayscale Bitcoin Trust (GBTC) contribute to these inflows in the second quarter?
On Monday, there was a noteworthy breakthrough in the trend for Grayscale Bitcoin Trust (GBTC). In contrast to its usual daily outflows, GBTC observed a decrease in outflows, specifically a reduction of $191.7 million. This stands in stark contrast to the substantial outflow of $640 million witnessed the prior week.
What were the inflow results for each specific Bitcoin ETF?
Fidelity Wise Origin Bitcoin Trust (FBTC) emerged as the frontrunner, drawing substantial net flows worth $208.2 million, while closely tailing behind was BlackRock’s iShares Bitcoin Trust (IBTC) at $198.4 million. Conversely, Bitwise attracted an influx of $20 million, while Ark’s ETFs garnered a comparatively lower amount of $17.2 million.
How much money have all U.S. Bitcoin ETFs received in net inflows up to Tuesday?
Until Tuesday, the combined net inflows for U.S. Bitcoin ETFs have reached a total of $1.01 billion.
About past data, how do the outflow statistics of Grayscale stack up?
Grayscale’s drainage pace has decelerated, witnessing an outflow of $191.7 million on Monday. This marks a notable decline compared to the preceding week’s $640 million. Analysts connect this deceleration to initial customers opting to withdraw funds after share prices regained equivalence with the foundational BTC assets.
How was FTX implicated in the Grayscale sell-off?
After undergoing its transformation into an ETF, the fund witnessed FTX, a crypto exchange facing bankruptcy, exert substantial influence through the selling of GBTC shares amounting to $900 million.
What implications does the decrease in Grayscale’s fund volume have on indicating the conclusion of the sell-off?
There are indications that the downward trend in Grayscale’s fund is diminishing, as BlackRock’s iShares Bitcoin Trust (IBTC) has seen a comparable trading volume to GBTC for two consecutive days. This could imply that the market sell-off is starting to calm down.
Why did investors shift their investments from Grayscale to BlackRock’s ETF?
Grayscale’s towering 1.5% management fee prompted investors to feverishly flock towards BlackRock’s iShares Bitcoin Trust (IBTC), enticed by its meagre 0.1% charge. This fee disparity spurned a migration of assets from one fund to the other.
Despite concerns about the recent sell-off, what is driving the increasing popularity of Bitcoin ETFs?
Investors are increasingly embracing Bitcoin Exchange-Traded Funds (ETFs) due to their cost-efficiency and digital characteristics. The CEO of Bitwise, Matt Hougan, pointed out the significant benefits of being inherently digital, which has contributed to the growing popularity of these investment vehicles.