Following intense withdrawals last week, US-based spot Bitcoin exchange-traded funds (ETFs) saw net inflows once again this week. On March 28th, all nine spot Bitcoin ETFs recorded a total of $178 million in net inflows, indicating a notable shift in investor sentiment. Particularly, the significant reduction in outflows from the Grayscale Bitcoin ETF (GBTC) was striking, with a 60% decrease compared to the previous day.
Lowest Level Since March 12th
Throughout March, significant withdrawals from GBTC were observed, but on March 28th, they dropped to the lowest level since March 12th. Data from Farside Investors reveals that since the launch of the spot Bitcoin ETF, more than $14.6 billion in BTC has been withdrawn from GBTC. GBTC’s Bitcoin holdings have decreased by over 50% since the beginning of the year and are currently at the $340,000 level.
The high fund management fee is cited as a significant factor contributing to the outflows from GBTC. Investors are shifting their funds to other spot Bitcoin ETFs, such as those offered by BlackRock and Fidelity, which provide lower fees. In particular, BlackRock’s spot Bitcoin ETF, IBIT, has seen substantial inflows amounting to $13.8 billion and is preparing to surpass GBTC in total assets under management (AUM).
In response to concerns about high fund management fees, Grayscale acknowledged the issue and announced plans to reduce fees in the near future. Grayscale CEO Michael Sonnenshein stated last week that GBTC fees would be reduced over time, though he did not provide any details on the extent of the reduction.
On the other hand, Bloomberg analysts also suggest that the significant outflows from GBTC could be due to intense liquidations by bankrupt entities like Gemini, aiming to repay creditors. As such selling pressure diminishes over time, the outflow pressure on GBTC is expected to ease.
Potential for a Supply Shock
Despite efforts to alleviate concerns and reduce outflows, Grayscale faces stiff competition in the spot Bitcoin ETF market from major players like BlackRock and Fidelity. Experts suggest that if GBTC’s outflows continue to decrease and inflows into ETFs maintain their momentum, a potential supply shock in Bitcoin could occur, followed by a sharp rise in the prices of the largest cryptocurrencies and altcoins.
