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Grayscale’s Bitcoin ETF Sees First Inflows in 78 Days

After a streak of outflows, Grayscale’s Bitcoin Trust exchange-traded fund finally saw a day of net positive inflows
May 6, 2024

Grayscale's Bitcoin Trust exchange-traded fund (ETF) has seen its first day of net positive inflows after a prolonged period of continuous outflows.

According to preliminary data from Farside, on May 3, Grayscale’s Bitcoin Trust (GBTC) recorded $63 million in net inflows. This positive momentum follows approximately $17.5 billion in outflows since the launch of 11 spot Bitcoin ETFs on January 11.

Franklin Templeton’s Bitcoin ETF also made headlines, hitting a record high of $60.9 million in inflows.

Meanwhile, Fidelity’s Wise Origin Bitcoin Fund led the day’s inflows with an impressive $102.6 million. It was closely followed by the Bitwise Bitcoin Fund with $33.5 million and the Invesco Galaxy Bitcoin ETF with $33.2 million.

The crypto community has been buzzing with speculation about how this shift might influence Bitcoin's price.

Pseudonymous crypto investor DivXman noted that GBTC had been a primary source of sell pressure across all spot Bitcoin ETFs but hinted at a possible change in dynamics. He suggested that decreased sell pressure and increased demand might result from ETFs collectively buying more BTC than miners can create. 

Echoing this sentiment, crypto trader Jelle predicted to his followers that Bitcoin’s new all-time high could be on the horizon, citing the significant inflows into Grayscale’s ETF as a bullish indicator.

Reacting to the news, crypto trader Jordan Lindsey emphasized the impact on Bitcoin’s price, indicating that it was evidently responding to both outflows and inflows. Indeed, Bitcoin’s price surged by 4.91% over the past 24 hours to reach $62,840 at the time of publication, according to CoinMarketCap data.

Several factors have contributed to Grayscale’s previous outflows since the launch of the 11 spot Bitcoin ETFs.

One prominent reason is GBTC’s comparatively high fees, standing at 1.5%, while other ETFs boast fees below 1%. Currently, Franklin Templeton offers the lowest fee at 0.19%.

Additionally, the selling off of large amounts of GBTC shares by bankrupt crypto firms FTX and Genesis in an effort to repay creditors has been another key driver.

On April 6, Genesis liquidated approximately 36 million GBTC shares for $2.1 billion to acquire 32,041 Bitcoin.

Market observers have been speculating about when the “Bitcoin bleed” in GBTC might come to an end. While GBTC outflows slowed down in late January and February, some analysts believed they could be nearing their conclusion. However, in mid-February, bankruptcy courts permitted crypto lender Genesis to liquidate approximately $1.3 billion worth of GBTC shares as part of efforts to reimburse investors.

ETF analyst Eric Balchunas from Bloomberg previously suggested that the outflows would likely stop once GBTC experienced a 25% reduction in outstanding shares. However, a poll on X indicated that most respondents expected the bleed to end in the range of 35-50%.

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