Grayscale, a crypto asset manager, has seen its market share in the spot Bitcoin exchange-traded fund (ETF) drop below 50% for the first time since the launch of Bitcoin ETFs in the US on January 11. As of March 12, the Grayscale Bitcoin Trust (GBTC) had total assets under management (AUM) of $28.5 billion, accounting for 48.9% of the $56.7 billion held across ten US Bitcoin ETFs, according to data from Dune Analytics.
On the first day of trading for the US Bitcoin ETFs, Grayscale’s fund accounted for approximately 99.5% of their total AUM. However, consistent daily outflows from GBTC, averaging $329 million per day last week, have contributed to the decline in the ETF’s market share. The most significant outflows occurred in the first month of Bitcoin ETFs going live, with $7 billion leaving the fund in just over a month. Outflows slowed down in late January, leading some analysts to believe they were coming to an end. However, the bankruptcy courts allowed crypto lender Genesis to liquidate around $1.3 billion worth of GBTC shares in mid-February, resulting in increased outflows. To date, GBTC outflows have exceeded $11 billion, according to Farside Bitcoin ETF flow data.
Initially, Grayscale’s ETF was a trust that allowed institutional investors to gain exposure to Bitcoin by locking up funds for at least six months. However, after winning a court battle against the Securities and Exchange Commission in August and the subsequent approval of other spot Bitcoin ETF applications, the trust was converted into an ETF. This conversion enabled institutional investors to remove their capital from the fund permanently or shift their assets to Bitcoin ETFs with lower fees, taking advantage of GBTC arbitrage trading.
While the market was initially concerned about the outflows from GBTC, the increasing net inflows into BlackRock’s iShares Bitcoin ETF (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC) have brought optimism. These two funds have generated a total of $16.9 billion worth of inflows since their inception. The solid inflows into Bitcoin ETFs have been credited with driving the price of Bitcoin to new all-time highs, reaching $72,900 on March 11. BlackRock’s IBIT ETF currently holds over 200,000 BTC, valued at approximately $14.3 billion at current prices, according to K33 Research data.
Overall, the growing inflows into the newly launched ETFs have been recognized as a fundamental driving factor behind the rapid appreciation of Bitcoin’s price. This positive trend has provided optimism for the market, despite the declining market share of Grayscale’s GBTC fund.