Bitcoin ETF snapshot: GBTC surprise helps end sector’s seven-day outflow run

The Grayscale Bitcoin Trust (GBTC) converted to an ETF nearly four months ago.

It took that long for the fund to see its first day of net inflows.

That unprecedented event occurred on Friday, when GBTC saw $63 million in net money enter the ETF, according to Farside Investors data.

GBTC had suffered net outflows for 78 days before that — piling up to equal $17.4 billion.

Just don’t expect the GBTC inflows to become a regular thing, one segment observer says.

“It’s difficult to discern what might be behind the flows into GBTC,” said Nate Geraci, president of The ETF Store. “ETF buyers are an extremely diverse group with varying motivations. That said, I would be surprised if the inflows become a trend.”

Part of the reason it will have a hard time consistently attracting new money? Its cost, Geraci noted.

Industry watchers have attributed GBTC’s constant asset spillage to the fund’s fee of 1.5% — a much higher level than its 10 competitors in the US.

Beyond the fee, bankrupt lender Genesis was among those offloading its GBTC holdings, contributing to the asset exodus from the fund.

And still, Grayscale holds the assets under management lead in the category. GBTC manages roughly $18.1 billion in assets, while BlackRock’s iShares Bitcoin Trust (IBIT) is close behind with about $16.9 billion.

Grayscale has defended its higher fee, previously pointing out GBTC’s “market-leading liquidity, tight spreads, high trading volumes and a decade-long track record of operational success.”

“While GBTC can still hang its hat on ample liquidity and tight spreads, there are now competing products which can boast the same,” Geraci told Blockworks.

The crypto asset manager also filed to set up the Grayscale Bitcoin Mini Trust (BTC), which would cost a fraction of GBTC’s price. The company has not yet revealed a final proposed expense ratio.

GBTC would seed the new fund as part of a “spin off” mechanism unique to commodity ETFs, according to Grayscale. In addition, a portion of GBTC’s bitcoin holdings would be allocated to the proposed Mini Trust.

Beyond Grayscale’s inflows on Friday, it was a day of net inflows for most of the 11-fund US spot bitcoin ETF category — amounting to $378 million collectively.

The asset gains were an anomaly of late, snapping a record seven-day net outflow streak for the segment.

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Analysts and executives have pointed to expectations of the Federal Reserve keeping interest rates higher for longer as one reason demand for bitcoin ETFs have stalled.

The asset’s price also trended downward in April.

Bitcoin (BTC) was trading at about $64,000 at about 10:30 am ET Monday — up about 1.4% from a week ago but down nearly 6% in the last 30 days.

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