Bitcoin Spot ETFs Witness Highest Single-Day Outflows as GBTC Continues to Bleed

Bitcoin spot ETFs have experienced a significant net outflow of $159 million, marking the largest single-day total net outflow since their launch.

Data from analytics platform Alpha shows that out of all the spot Bitcoin ETFs, Grayscale ETF (GBTC) has seen the most substantial net outflows, with $429 million leaving the fund over the past day alone.

Conversely, all other ETFs, excluding Grayscale, experienced net inflows of $270 million.

More specifically, BlackRock’s IBIT fund saw inflows totaling $66.16 million, while Fidelity’s FBTC saw more than $125 million in inflows.

Ark Invest, Bitwise, and Invesco were three other funds that saw the biggest inflows, each around $20 million.

GBTC Outflows Start to Decline

Notably, there has been a decline in the outflow of funds from Grayscale Bitcoin Trust (GBTC) for two consecutive days.

This decrease represents the lowest outflow since the introduction of Bitcoin spot ETFs in the United States.

Bloomberg analyst Eric Balchunas noted that while GBTC outflows are showing a downward trend, the liquidations remain substantial.

$GBTC volume down again today.. could be sign of some exhaustion in the selling (same thing happens in stocks, $SPY volume goes up w selling, down w peace). We'll see tonight tho. And I'm only reporting on shares out data sent by their admin to BBG. Only thing you can 100% trust. pic.twitter.com/m9uRs7tBr5

— Eric Balchunas (@EricBalchunas) January 24, 2024

On January 23rd, the outflow from GBTC reached $515 million, followed by $640 million on the 22nd.

In total, over a span of nine trading days, the Bitcoin Trust lost 106,092 BTC, equivalent to approximately $4.4 billion in value.

Despite the recent outflows, Grayscale CEO Michael Sonnenshein believes that most of the 11 spot Bitcoin ETFs approved by the U.S. Securities and Exchange Commission (SEC) are likely to fail.

He suggested that only “two or three exchange-traded funds will probably achieve some critical mass” in the market.

Lower-Fee Bitcoin Spot ETFs to Attract More Inflows

Aurelie Barthere, Principal Research Analyst at Nansen, said in a recent interview with Cryptonews.com that she expects lower-fee ETFs to attract more inflows in the short term.

“ETFs and futures are different instruments; we would expect futures to stay favoured for trading and hedging, and ETFs to be a go-to retail instrument, like in traditional finance.”

The competitive landscape among Bitcoin spot ETF providers, according to Barthere, will be shaped by factors like reputation, size, existing footprint, and management fees.

“Reputation/size/existing footprint + management fee will probably lead to some leaders dominating the market,” she predicted.

JPMorgan analysts have also predicted that the success of these newly created ETFs will hinge on fees and liquidity.

Given the high 1.5% fees associated with GBTC, they expect significant outflows from this Bitcoin trust.

Furthermore, speculative investors who purchased discounted GBTC shares in the secondary market over the past year, anticipating the elimination of the discount to Net Asset Value (NAV) upon conversion, are likely to further contribute to GBTC liquidation.

This could lead to approximately $3 billion exiting GBTC and flowing into the newly launched ETFs.

The analysts anticipate even larger outflows of $5-$10 billion if GBTC fails to reduce its fees to the 0.25% level set by issuers like BlackRock.