Spot Bitcoin ETFs Record $4B in Inflows as Incumbent Crypto Fund Issuers Lose $2.9B

Spot Bitcoin exchange-traded fund (ETF) is garnering rising interest, but crypto fund incumbents are on the losing side of the equation.

CoinShares’ Digital Asset Fund Flows Weekly Report on Jan 22 disclosed a substantial $4.13 billion in inflows since the launch of the first spot Bitcoin ETF on January 11, following approval from the US Securities and Exchange Commission (SEC).

🔴 Digital asset investment saw minor outflows last week, totalling US$21m.

📈 Trading volumes in #Bitcoin are very high, totalling US$11.8bn.

– Issuer dynamics –
Higher cost issuers: US$2.9bn outflows
Newly issued ETFs: US$4.13bn inflows (since launch)
Net inflows into US ETFs… pic.twitter.com/sYZAD2hRfB

— CoinShares (@CoinSharesCo) January 22, 2024

The report also highlights a significant drawback for numerous crypto fund incumbents, including Grayscale.

According to the digital asset investment company, a substantial $2.9 billion in outflows from traditional crypto fund managers occurred within the last two weeks, with the funds transferred to spot Bitcoin ETFs.

Examining the major losers, CoinShares identifies Grayscale as the major negative, with the digital asset investment firm losing $2.23 billion in a week. Its month-to-date (MTD) outflows stood at $2.8 billion, while it still holds more than $30 billion in assets under management (AUM).

Other firms, including ProShares ETFs and Purpose Investments Inc. ETF, also lost significant chunks in digital funds. ProShares ETFs saw outflows of $58.4 million, while Purpose Investments Inc. ETF recorded $101.9 million in outflows within a week.

Giving a reason for this sudden change, CoinShares pinpoints the competitive fees newly listed spot Bitcoin ETFs offer to investors.

While companies like Grayscale and ProShares charge 1.5% and 0.95% in management fees respectively, new spot Bitcoin ETFs levy investors a considerably cheaper fee of 0.2% to 0.5%. These competitive rates have since prompted several crypto ETF investors to rapidly switch allegiance following the SEC’s approval.

Bitcoin, the Biggest Mover

In every spectrum of comparison, Bitcoin continues to lead the virtual asset landscape.

According to CoinShares, the foremost digital asset recorded $24.7 million in outflows among fund managers in the past week, while the Ethereum asset saw $13.6 million moved to spot Bitcoin ETFs.

Other altcoins like Solana and Litecoin were also impacted, with $8.5 million and $1.5 million in digital assets moved across the financial landscape. On the other hand, ‘Short Bitcoin’-backed ETFs received $12.7 million in inflows.

Meanwhile, blockchain equities experienced a positive turn, registering significant inflows of $156 million in the past week. This saw the distributed ledger technology (DLT) have a bullish inflow of $767 million in the past nine weeks.

Furthermore, the US market remains the top performer, with the North American institutional crypto landscape witnessing inflows of $263.2 million in a week. In comparison, Brazil ranked a distant second in the best-performing category, with only $6.8 million in digital asset inflows.

Canada was the worst-performing country in the North American region, with $165.4 million in outflows captured. Germany, Switzerland, and Sweden joined the queue, with outflows recorded at $98.8 million, $19.9 million, and $13.3 million, respectively.