Grayscale Investments has reported a 50% reduction in its Bitcoin Trust holdings due to the emergence of competitive U.S. spot bitcoin ETFs offering lower fees and capturing significant market share.
Grayscale Investments has faced a notable decrease in its bitcoin holdings. The investment firm, reported a 50% drop in its Grayscale Bitcoin Trust (GBTC) holdings since the introduction of U.S. spot bitcoin Exchange-Traded Funds (ETFs) on January 11.
The trust now contains approximately 311,621 bitcoin, a stark contrast to the 619,220 bitcoin it had at the start of spot bitcoin ETF trading. The decline in holdings comes as Grayscale contends with a higher fee structure, currently at 1.5%, compared to the more competitive rates of new market entrants, such as BlackRock’s IBIT, which charges a fee of 0.12%.
Despite the significant reduction in bitcoin holdings, Grayscale’s assets under management have decreased by a less drastic 31%, from $28.7 billion to $19.8 billion, in correlation with current bitcoin prices.
The competitive landscape has shifted dramatically with the entry of BlackRock’s IBIT and Fidelity’s FBTC spot ETFs, leading to a redistribution of market share. Grayscale's GBTC, once a market monopolist, has now seen its share reduced to 37.3%, while IBIT has quickly risen to a 32.2% share and FBTC holds 17.8%.
Fidelity’s FBTC saw an end to its 63-day inflow streak, while IBIT continues to see inflows, marking a 65-day streak. James Butterfill from CoinShares highlighted investor caution in the market, whereas ETF analyst James Seyffart remarked on social media platform X that having a flow of zero for ETFs is a common occurrence.
Okay too many questions about #Bitcoin ETFs and zero flows -- a few quick thoughts:
— James Seyffart (@JSeyff) April 16, 2024
1. On any given day, the vast majority of ETFs will have a flow number of ZERO -- this is very normal. There are ~3,500 ETFs in the US. Yesterday 2,903 of them had a flow of exactly zero
The Bitcoin community is now looking ahead to the bitcoin halving event, expected to occur in four days, which will reduce miners’ block rewards by 50%. This event, historically associated with market rallies, does not have a direct correlation with the GBTC's decline but is another point of interest in the timeline of Bitcoin developments.
As of April 16, 2024, the 10 spot Bitcoin ETFs hold a collective 862,162 BTC, valued at $54.7 billion, as the market continues to evolve and investors adjust their strategies accordingly.
