Grayscale, a crypto asset manager, continues to experience a decrease in outflows from its spot Bitcoin ETF. However, experts believe that there is still potential for further decline.
Data from Bianco Research and Farside reveals that the total outflow of funds from the Grayscale Bitcoin Trust (GBTC), since it converted to a spot Bitcoin (BTC) ETF, reached $7 billion on February 16. Despite the significant reduction in the outflow rate, observers, including Nate Geraci, President of ETF Store, suggest that the decline may not be over.
In January, the largest portion of the exodus occurred, with $5.64 billion leaving GBTC by the end of the month. However, February has only witnessed outflows of $1.37 billion so far.
Jim Bianco, founder of Bianco Research and former Wall Street analyst and commentator, stated in a February 18 post on X that a considerable amount of the outflow is due to investors rebalancing their portfolios and shifting to spot Bitcoin ETFs with lower fees. He added that the new batch of ETFs has reduced their fees to a range of 0 to 12 basis points, while Grayscale still charges 150 basis points.
Bianco also offered another explanation for the ongoing outflow from GBTC. He mentioned that the fund traded at a significant discount to the BTC market price, approximately 44% lower than Bitcoin, when BlackRock filed for its spot ETF in June 2023. He stated, “A lot of money flows into ‘cheap’ BTC.”
Meanwhile, Geraci believes that it is still early and expects the “asset bleed” to continue. He also speculates that Grayscale might launch a “mini-GBTC,” which would be a separate spot Bitcoin ETF with a considerably lower fee.
Additionally, further decline could occur after a judge recently approved an order allowing bankrupt crypto lender Genesis to sell a portion of its investments in Grayscale. Court documents show that Genesis held around $1.6 billion worth of shares in GBTC, the Grayscale Ethereum Trust, and the Grayscale Ethereum Classic Trust.
In related news, Bitcoin ETF expert Eric Balchunas has proven his skeptics wrong and attained recognition in the X Hall of Flame.