The Grayscale Bitcoin Trust (GBTC) experienced a notable reduction in its Bitcoin holdings. Investors withdrew an estimated $494 million worth of Bitcoin, tallying up to about 6,850 BTC. This event initially caught the attention of BitMEX Research, marking it as the largest outflow recorded. However, they later specified that the significance lay in the high Bitcoin prices rather than the outflow volume itself.
Critics pointed out that GBTC had faced larger outflows in terms of dollar value. Specifically, the fund saw over $500 million leave in several instances throughout January and once more on February 29. These withdrawals are part of a declining trend in Grayscale’s Bitcoin assets, which have decreased by 36% since the fund’s conversion to a spot Exchange-Traded Fund (ETF) earlier in January. Prior to this transformation, Grayscale held around 620,000 BTC. This number has now dwindled to 395,744 BTC, valued at approximately $28.5 billion.
ETF Conversion Leads to Outflows Amid Competition
Since GBTC’s shift to a spot ETF format, it has seen a continuous stream of outflows, totaling $9.26 billion. This change allowed investors to directly redeem shares for Bitcoin, a new feature that was absent before. Yet, GBTC is relatively high fees, when compared to rivals like BlackRock’s IBIT and Fidelity’s FBTC, have accelerated these withdrawals.
Interestingly, the overall ETF market has mostly seen positive net flows since February, despite GBTC’s losses. Competitors have benefitted from this trend, with VanEck, Fidelity, and Bitwise seeing significant inflows into their Bitcoin ETFs. Specifically, VanEck’s HODL ETF experienced a record $119 million inflow on March 11, attributed to a temporary fee cut. Fidelity and Bitwise also reported notable inflows into their funds.