Grayscale Investments, a major investor in Bitcoin (BTC), has witnessed a 50% decrease in its holdings of the spot Bitcoin exchange-traded fund (ETF) ahead of the highly anticipated Bitcoin halving event. The Grayscale Bitcoin Trust ETF (GBTC) saw its Bitcoin holdings shrink from 619,220 BTC on the first day of trading to 309,871 BTC on its 66th day of trading, representing a 50% decrease. Currently, the value of these holdings is $19.7 billion.
This decrease in GBTC holdings occurred just two days before the Bitcoin halving, which will cut the mining reward in half from 6.25 BTC to 3.125 BTC. The Bitcoin halving, which takes place every four years or every 210,000 blocks, is a significant event that is often associated with subsequent rallies in the cryptocurrency market. While these two events do not directly correlate, they add another coincidence to the timeline of Bitcoin-related occurrences.
Since its first day of trading, GBTC has experienced a significant sell-off, which has had a notable impact on the price of Bitcoin. This sell-off has largely been attributed to high trading fees, as GBTC had the highest fees among the 10 spot Bitcoin ETFs in the United States, starting at 1.5%. In contrast, most other Bitcoin ETFs have lowered their fees to increase competitiveness, setting trading commissions between 0.2% and 0.4%.
GBTC’s biggest competitor, BlackRock’s iShares Bitcoin Trust (IBIT), offered a fee of 0.25% at the start of trading, with an additional 0.12% discount for the first $5 billion of traded assets during the waiver period. IBIT has seen a significant increase in holdings, surging over 10,000% from 2,621 BTC on the first day of trading to 272,548 BTC on April 16. However, it is still 13% away from reaching GBTC’s holdings.
Despite the outflows from GBTC, the other spot Bitcoin ETF providers, along with eight other issuers, have accumulated approximately 224,552 BTC since the launch of trading, excluding GBTC. As of April 16, 2024, these 10 spot Bitcoin ETFs collectively held around 862,162 BTC, with a total value of $54.7 billion.
In conclusion, the decrease in GBTC holdings and the upcoming Bitcoin halving are two separate events that have occurred around the same time, adding to the series of Bitcoin-related events. GBTC’s sell-off can be attributed to its high trading fees, while other Bitcoin ETFs have been lowering their fees to attract more investors. BlackRock’s IBIT has seen significant growth in holdings but has not been able to absorb the outflows from GBTC. Overall, the spot Bitcoin ETF providers have accumulated a substantial amount of BTC since the launch of trading, indicating continued interest in the cryptocurrency market.