GBTC’s decline coincides with a recent downturn in the crypto market, resulting in Bitcoin price falling drastically.
The dominance of Grayscale Investment’s spot Bitcoin ETF, the Grayscale Bitcoin Trust (GBTC) in the market has come under question as it fell to 37% on Monday. This development comes on the heels of a sustained capital exodus in the product.
Grayscale’s Bitcoin ETF Holdings Halved
The Bitcoin (BTC) holdings of Grayscale’s GBTC launched alongside ten spot Bitcoin ETFs in January have been halved. According to Monday’s disclosure, GBTC held around 619,220 BTC at the time of its launch, a figure that has fallen 50% to about 311,621.
In contrast to other ETFs such as iShares Bitcoin Trust (IBIT) from BlackRock Inc (NYSE: BLK) and Fidelity’s Wise Origin Bitcoin Fund (FBTC), GBTC was converted into an ETF rather than being launched from scratch. Also, GBTC charges higher fees than its rivals, pegged at 1.5% as opposed to the present 0.12% for BlackRock’s IBIT.
In terms of Assets Under Management (AUM), GBTC has reduced 31% from $28.7 billion on January 11 to $19.75 billion according to the current price value. Meanwhile, IBIT and FBTC have been the key beneficiaries in terms of market share by Bitcoin holdings. Within the same period, IBIT has gained a 32.2% share while FBTC has seen an increment of 17.8%.
Notably, BlackRock’s IBIT and Grayscale’s GBTC were the only spot bitcoin ETFs to see capital movements for two consecutive trading days this week. On Monday, IBIT recorded inflows of $73.4 million but was overpowered by GBTC’s outflows of $110.1 million, resulting in a $36.7 million net outflow for the day. This comes after Friday’s net outflows of $55.1 million. So far, $82.5 million has exited the funds after three out of five negative days recorded last week.
Despite these notable outflows, total net inflows since the launch of the spot Bitcoin ETFs amount to $12.5 billion. According to recent data from Coinglass, the combined assets held by all spot Bitcoin ETFs in the United States currently amount to roughly 840,000 BTC. This accounts for more than 4% of Bitcoin’s total supply of 21 million.
Markedly, GBTC’s decline coincides with a recent downturn in the crypto market, resulting in Bitcoin price falling drastically. As of the latest data, Bitcoin is trading at $62,276, demonstrating a 6% decrease in the past 24 hours. Additionally, the market capitalization has also reduced by 6% to $1.2 trillion.
Anticipation of Bitcoin Halving
Amid this decline, the Bitcoin halving event 2024, just a few days away, is anticipated by investors to have a positive impact on the price of the leading cryptocurrency. From a historical context, the halving event has been associated with price increases for Bitcoin. This is because it leads to a reduced rate of Bitcoin creation which can cause scarcity.
However, Markus Thielen, the Head of Research at 10x Research is of the opinion that the market may not see any upward movement in Bitcoin’s price until October this year.
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