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Grayscale’s GBTC Holdings Plummet by 50% Amidst Spot ETF Onslaught
Introduction
The launch of US spot bitcoin exchange-traded funds (ETFs) in January has had a significant impact on Grayscale’s Bitcoin Trust (GBTC). Grayscale’s bitcoin holdings have been cut in half, while spot ETFs have gained market share.
Declining Bitcoin Holdings
Grayscale’s GBTC trust held approximately 619,220 BTC when spot bitcoin trading began. However, as of Monday, its holdings have dropped to around 311,621 BTC, a decline of approximately 50%. This dramatic decrease is attributed to the introduction of spot bitcoin ETFs that offer lower fees and increased accessibility.
Market Share Shift
BlackRock’s IBIT and Fidelity’s FBTC spot ETFs have emerged as the primary beneficiaries of Grayscale’s decline. GBTC’s market share has fallen from 100% at launch to just 37.3%, while IBIT and FBTC now hold 32.2% and 17.8% market shares, respectively.
Fee Differential
Grayscale’s GBTC charges a higher fee of 1.5% compared to the current 0.12% fee for BlackRock’s IBIT. This fee difference has incentivized investors to shift their holdings towards the cheaper spot ETFs.
Persistent Outflows
Despite the recent surge in bitcoin prices, Grayscale’s GBTC has experienced persistent outflows. On Monday, GBTC recorded outflows of $110.1 million, leading to a net outflow of $36.7 million for the day. This follows net outflows of $55.1 million on Friday, indicating ongoing investor hesitation.
Hong Kong Spot ETF Approvals
In contrast to the US market, Hong Kong has recently approved several spot bitcoin and ether ETFs. However, analysts remain cautious about their potential impact, suggesting they may attract limited assets compared to US-listed ETFs.
Bitcoin Price Volatility
Bitcoin prices have experienced significant volatility in recent days, dropping by 10% amid geopolitical tensions. However, bitcoin remains up 50% year-to-date, and the upcoming halving event in four days is expected to impact market sentiment.
Conclusion
The launch of spot bitcoin ETFs has had a profound impact on Grayscale’s GBTC holdings. The trust’s market share has declined significantly as investors have shifted towards lower-fee spot ETF alternatives. While the crypto market remains volatile, the long-term outlook for bitcoin and the broader crypto ecosystem continues to generate optimism among many investors.
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also read:How are spot bitcoin ETFs impacting Hong Kong’s financial market and regulations?
Divya