Home CryptocurrencyBitcoin Grayscale’s GBTC hemorrhage reduces assets under management by $5 billion

Grayscale’s GBTC hemorrhage reduces assets under management by $5 billion

by SuperiorInvest

Capital outflows from the Grayscale Bitcoin Trust (GBTC) have intensified in its first days of trading as a spot Bitcoin exchange-traded fund (ETF), contributing to a nearly $5 billion decline in assets under management (AUM).

According to data from YChart and Grayscale, the ETF’s total assets fell from $28.5 billion on January 10 to $23.7 billion on January 18.

The drop in Bitcoin (BTC) price also explains the drop in AUM. As the underlying asset of the ETF, the market value of Bitcoin has a direct impact on the value of the fund. At the time of writing, the price of Bitcoin is down 4% over the past week, trading at $40,582, according to data from Cointelegraph.

Capital outflows from GBTC were anticipated. The approval of the ETF by the Securities and Exchange Commission on January 10 allowed GBTC holders to convert and redeem their shares for Bitcoin. Before that, investors would have to sell shares on the secondary market to exit their positions.

About $1.1 billion flowed out of the Grayscale ETF in a three-day period as holders sought lower fees from competitors and took advantage of a narrow discount on the stock. Anthony Scaramucci, founder of SkyBridge Capital, told Bloomberg that certain GBTC investors were suffering losses and switching to cheaper ETF options. To illustrate the cost gap, GBTC has a 1.5% fee, while other ETFs have fees as low as 0.20% plus six months of free investment.

Dave Weisberger, CEO of CoinRoutes noted in X that the composition of GBTC holders may be playing an important role in the wave of outflows. Along with hedgers seeking discounts and other investors opting for lower fees, panic selling could be contributing to recent market moves. According to Weisberger:

“Taxable accounts that take profits or panic sell to preserve them are THE problem. We have no idea what the percentage of these is, OR the average entry price for holders.”

As GBTC faces its first storm as a spot ETF, other Bitcoin funds are moving in a different direction. Issuers added another net 10,667 BTC to their portfolios on the fifth day of trading amid increased activity.

According to data from CC15Capital, there has been a net addition of approximately $440 million to issuers’ Bitcoin holdings. A significant portion of this increase was attributed to the BlackRock ETF, which acquired around 8,700 BTC, valued at almost $358 million. Since its inception, nine ETFs (excluding Grayscale) have collectively purchased about 68,500 BTC.

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