Since the introduction of spot Bitcoin ETFs earlier this year, GBTC has experienced substantial outflows, resulting in its AUM (Assets Under Management) decreasing to $23.7 billion as of Thursday.
While Grayscale has maintained its leading position among its competitors, its market share appears to be dwindling.
Receding GBTC Outflows
Between January 11-21, the Grayscale Bitcoin Trust (GBTC) dominated the spot ETF market, commanding over 50% of trade volumes. However, recent data by Kaiko revealed a significant decline in its share, dropping to approximately 30% last week.
While GBTC accounted for more than 50% share of overall spot #ETF trade volumes between January 11-21, its share has dropped to around 30% last week. pic.twitter.com/BcBiuK56rQ — Kaiko (@KaikoData) February 15, 2024
Grayscale notably set the management fee for its converted ETF at 1.50%, surpassing the fees of its nine rival players by more than one percentage point, or 100 basis points, which may have prompted ETF holders to flock to other cheaper alternatives.
While the higher management fee may impact its market share over time, it may not be the only factor at play. There could be other factors that currently outweigh the impact of the higher fee.
For one, investors who purchased the fund before its ETF listing are now profiting by over 100% upon selling the product and are now “moving to new pastures,” as noted by Falcon X in its recent report.
“GBTC has traded a little over 300 million shares since the ETF launch. But it has also traded about 600 million shares since the possibility of a spot ETF came into the spotlight: 200 million shares since its NAV discount shrunk to less than 10% as ETF was considered a done deal, another 200 million between then and the Grayscale lawsuit win, and another 200 million between then and Blackrock filling for a spot BTC ETF.”
Even with a significant turnover, a small portion of the large amount of GBTC shares traded in the months before the ETF launch selling after the event would create a “meaningful” selling pressure.
Rebound Soon
GBTC’s sell-off may also threaten Bitcoin’s price trajectory, but FalconX believes this selling pressure is likely to dissipate quickly, as evidenced by recent trends in the past few days. The brokerage firm noted,
“this flow is likely to exhaust itself relatively quickly, which is the trend that we might have started to see over the past few days.”
Additionally, the latest data by Apollo indicates that GBTC currently holds an impressive 461,983 BTC. In comparison, BlackRock holds 105,280 BTC, Fidelity has 79,752 BTC, followed by Ark/21 Shares, and Bitwise, with 22,965 BTC and 18,887 BTC, respectively.
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