Grayscale, the crypto asset manager, has seen a decrease in outflows from its spot Bitcoin ETF, but experts believe there is still potential for further decline.
Data from Bianco Research and Farside reveals that the total outflow of funds from the Grayscale Bitcoin Trust (GBTC), which converted to a spot Bitcoin ETF, reached $7 billion on February 16. However, the rate of outflow has significantly slowed down, leading observers, including Nate Geraci, the President of ETF Store, to suggest that there may be more outflows to come.
In January, the largest portion of the exodus occurred, with $5.64 billion leaving GBTC by the end of the month. So far in February, there have been outflows of only $1.37 billion.
Jim Bianco, the founder of Bianco Research and a former Wall Street analyst, stated in a post on February 18 that much of the outflow can be attributed to investors rebalancing their portfolios and shifting to spot Bitcoin ETFs with lower fees. He noted that the new batch of ETFs has reduced their fees to between 0 and 12 basis points, while Grayscale still charges 150 basis points.
Bianco also mentioned another reason for the ongoing outflow from GBTC: the fund traded at a significant discount to the BTC market price, approximately 44% below the price of Bitcoin, when BlackRock filed for its spot ETF in June 2023. He stated, “A lot of money flows into ‘cheap’ BTC.”
On the other hand, Geraci believes that it is still early and that the outflow of assets will continue. He also speculates that Grayscale may launch a “mini-GBTC,” a separate spot Bitcoin ETF with a much lower fee.
Furthermore, there may be additional outflows after a judge recently approved an order allowing bankrupt crypto lender Genesis to sell a portion of its investments in Grayscale. According to court documents, Genesis held approximately $1.6 billion worth of shares in GBTC, the Grayscale Ethereum Trust, and the Grayscale Ethereum Classic Trust.