Grayscale, a prominent American digital asset management company has encountered substantial outflows in its Spot Bitcoin ETF, Grayscale Bitcoin Trust (GBTC). Many expert analysts attribute the outflows to factors such as elevated trading fees and potential accounting irregularities.
Grayscale’s bumpy journey
Despite obtaining approval for its Spot Bitcoin ETF from the United States Securities and Exchange Commission (SEC), Grayscale has faced challenges. After witnessing steady inflows following the ETF’s approval, recent reports indicate a staggering outflow of approximately $594 million from Grayscale’s GBTC.
Bloomberg Analyst James Seyffart shared a spreadsheet detailing the cumulative inflows and trading volumes of various Spot Bitcoin ETF companies. Grayscale stands out with total net outflows reaching $1.173 billion. Seyffart suggested that delayed accounting and settlement processes might be contributing to the extreme outflows reported.
Expert insights
Analysts speculate that Grayscale’s high trading fees with an expense ratio of 1.5% make its Spot Bitcoin ETF less attractive to investors than more affordable alternatives.
Senior Bloomberg Analyst Eric Balchunas addressed the outflows stating that traders may have seized opportunities for profit-taking and some investors could be opting to bear tax implications to escape the hefty 1.5% fee.
Positive momentum in spot Bitcoin ETF market
Amid Grayscale’s challenges, the Spot Bitcoin ETF market has demonstrated positive momentum. Seyffart reported an impressive trading volume of nearly $10 billion in Spot Bitcoin ETFs within three days. This volume highlights the increasing interest and positive sentiment among investors.
Balchunas shared insights into the market dynamics revealing that recently launched Spot Bitcoin ETFs attracted significant inflows totalling $1.4 billion.
BlackRock’s iShares Bitcoin Trust (IBIT) secured the lead with half a billion in inflows closely followed by Fidelity signalling a promising trend for the Spot Bitcoin ETF market.
With approximately 500 ETFs introduced in 2023 amassing $450 million in volume, the Spot Bitcoin ETF market appears to be on a robust upward trajectory fostering optimism among investors and industry observers.
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