Grayscale Bitcoin ETF Outflows Totaled $1.9 Billion In 1 Week

(CTN News) – Bit MEX Research shows Grayscale Bitcoin Trust lost $1.9 billion in outflows last week, tipping the group of U.S. spot bitcoin exchange-traded funds (ETFs) into net outflows.

In spite of increased interest in new funds from BlackRock and Fidelity Investments since the NYSE approved cryptocurrency ETFs in January, Grayscale holders were still forced to sell last week despite increased interest.

Grayscale’s fund conversion was not the only one to experience sluggish inflows last week. The price of bitcoin has recorded lows compared with the highs it hit earlier this month.

In addition to fees significantly higher than those of its rivals, Grayscale has been selling assets by bankruptcy trustees, analysts said.

In an interview with Morningstar, Bryan Armour said Grayscale kept its management fee at 1.5%, compared to 0.25% for BlackRock’s fund and even lower, including fee waivers, at competitors.

According to Grayscale, its team expects net outflows from strategies such as profit-taking and arbitrage as well as sales by bankruptcy trustees to satisfy FTX and other creditors. Last week, Sonnenshein told the firm will gradually cut fees on its flagship fund.

The iShares Bitcoin Trust, a BlackRock product, has recorded the largest gains, surpassing the $10 billion mark on March 1, according to Morningstar and TrackInsight data. BitMEX Research reports that inflows last week totaled $828.3 million, down from $2.48 billion the week before.

Neither BlackRock nor its spokesperson could be reached for comment.

Besides these challenges, Grayscale has faced others as well. Grayscale’s ETF would be replaced by a low-fee iShares fund, said Wealthfront, citing iShares’ high trade volume and low fees.

Alex Michalka, Wealthfront’s vice president of investment research, said: “Considering the all-in cost of expense ratio and how much it costs to buy and sell, we thought IBIT was the most attractive overall.”

Bitcoin remains about 9% below its peak, recorded only two weeks ago, after surging as much as 16 percent earlier this year. The ETFs have gained in line with those price movements.

An all-time high in an asset tends to result in profit-taking or at least a lull in buying, said Adam Sze, head of digital assets product for Global X.

In addition to a more stable price, institutional investors may be more interested in bitcoin ETFs if they see a more stable price.

The majority of the trading activity has come from individual investors and perhaps a few hedge funds, said Kyle Da Cruz, director of digital assets product at VanEck, which has its own bitcoin ETF.

“As a nascent asset class, it hasn’t attracted the ‘stickier’ money, he said.

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