Transformation in Bitcoin ETFs: Is Grayscale Inverting?
After a long period of net outflows, the Grayscale Bitcoin Trust mutual fund (ETF) recorded net positive inflows for the first time. According to preliminary data provided by Farside, Grayscale Bitcoin Trust (GBTC) experienced net inflows of $63 million on May 3. This positive development follows net outflows of approximately $17.5 billion since the launch of 11 spot Bitcoin ETFs on January 11.
One of the other funds featured in the news, the Franklin Templeton Bitcoin ETF, saw record inflows of $60.9 million. Fidelity’s Wise Origin Bitcoin Fund led the day with an impressive inflow of $102.6 million, followed by Bitwise Bitcoin Fund with $33.5 million and Invesco Galaxy Bitcoin ETF with $33.2 million. The cryptocurrency market is abuzz with speculation about how this development will affect the price of Bitcoin.
Pseudonymous cryptocurrency trader DivXman hinted that GBTC is the primary source of selling pressure across all spot Bitcoin ETFs, but there could be a possible shift in dynamics. He suggested that if miners were to bulk buy more BTC than they could produce, selling pressure could ease and demand could increase.
Supporting this idea, cryptocurrency investor Jelle told his followers that Bitcoin could reach a new all-time high, citing significant inflows into Grayscale’s ETF as a bullish indicator.
Reacting to the news, cryptocurrency investor Jordan Lindsey emphasized the impact on Bitcoin’s price and stated that it clearly responded to both outflows and inflows. In fact, according to CoinMarketCap data, the Bitcoin price increased by 4.91% in the last 24 hours, reaching $62,840 at press time.
There are several factors that have contributed to Grayscale’s previous outflows since the launch of the 11 spot Bitcoin ETF.
One of the standout reasons is GBTC’s relatively high fees of 1.5%, while other ETFs boast fees of less than 1%. Currently, Franklin Templeton offers the lowest fee at 0.19%.
Additionally, another important factor is that bankrupt cryptocurrency firms FTX and Genesis sold large amounts of GBTC shares in an effort to repay their creditors. Genesis sold approximately 36 million GBTC shares for $2.1 billion to purchase 32,041 Bitcoin on April 6.
Market watchers have been speculating when GBTC’s “Bitcoin hemorrhage” might end. Although GBTC outflows slowed in late January and February, some analysts believed they might end. But in mid-February, bankruptcy courts allowed cryptocurrency lender Genesis to sell about $1.3 billion worth of GBTC shares as part of its efforts to compensate investors.
ETF analyst Eric Balchunas previously suggested on Bloomberg that outflows would likely stop once there was a 25% decrease in GBTC’s outstanding shares. However, a survey on X found that most participants expected bleeding to end in the 35-50% range.
