Grayscale’s Dominance in Bitcoin ETF Market Dwindles to 50%

Grayscale, a crypto asset manager, has seen its spot Bitcoin exchange-traded fund (ETF) fall below 50% market share for the first time since the launch of spot Bitcoin ETFs in the United States on January 11. The Grayscale Bitcoin Trust (GBTC) now accounts for 48.9% of the total $56.7 billion held across ten U.S. Bitcoin ETFs, according to data from Dune Analytics. This marks a significant decline from the first trading day of the ETFs when GBTC accounted for around 99.5% of the total assets under management (AUM). Consistent daily outflows from GBTC, which averaged $329 million per day last week, have contributed to the decline in market share. GBTC outflows were most significant in the first month of Bitcoin ETFs going live, totaling $7 billion, but have slowed since then. However, bankruptcy courts allowed Genesis, a crypto lender, to liquidate approximately $1.3 billion worth of GBTC shares in mid-February, leading to increased outflows. Overall, GBTC outflows have reached over $11 billion to date. Grayscale’s ETF was initially a trust that allowed institutional investors to gain exposure to Bitcoin, but it was converted into an ETF after a court win over the Securities and Exchange Commission. This conversion allowed institutional investors to remove their capital from the fund or shift their assets to Bitcoin ETFs with lower fees. While outflows from GBTC initially spooked the market, growing net inflows into BlackRock’s iShares Bitcoin ETF and the Fidelity Wise Origin Bitcoin Fund have provided cause for optimism. These funds have generated a total of $16.9 billion worth of inflows since their inception. Several market commentators attribute the growing inflows into the newly launched ETFs as one of the driving factors behind the rapid appreciation in the price of Bitcoin, which reached a new all-time high of $72,900 on March 11. BlackRock’s fund now holds over 200,000 BTC, worth approximately $14.3 billion.