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. As of March 12, the Grayscale Bitcoin Trust (GBTC) had $28.5 billion in total assets under management (AUM), accounting for 48.9% of the $56.7 billion held by ten U.S. Bitcoin ETFs, according to data from Dune Analytics.
Grayscale’s GBTC fund initially accounted for around 99.5% of the total AUM of the ten U.S. spot Bitcoin ETFs on their first trading day. However, consistent daily outflows from GBTC, averaging $329 million per day last week, have eroded the ETF’s market share. The largest outflows from GBTC occurred within the first month of Bitcoin ETFs going live, with $7 billion leaving the fund in a little over a month. Outflows then slowed in late January, leading analysts to speculate that they might be coming to an end.
However, in mid-February, bankruptcy courts allowed crypto lender Genesis to liquidate approximately $1.3 billion worth of GBTC shares as part of efforts to reimburse investors, causing outflows to increase again. To date, GBTC outflows have reached just over $11 billion.
Grayscale’s ETF was initially a trust that allowed institutional investors to gain exposure to Bitcoin by locking up funds for at least six months. After winning a court case against the Securities and Exchange Commission in August, and with the regulator’s subsequent approvals of other spot Bitcoin ETF applications, the trust was converted into an ETF. This conversion enabled institutional investors to remove their capital from the fund permanently or shift their assets to Bitcoin ETFs with lower fees, taking advantage of a GBTC arbitrage trade.
While the market was initially concerned about the increasing outflows from GBTC, the growing net inflows into BlackRock’s iShares Bitcoin ETF (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC) have provided optimism. These funds have generated a total of $16.9 billion worth of inflows since their inception. Market commentators have attributed the growing inflows into the newly launched ETFs as one of the key factors driving the rapid appreciation in the price of Bitcoin, which reached a new all-time high of $72,900 on March 11.
BlackRock’s IBIT ETF now holds over 200,000 BTC, worth approximately $14.3 billion at current prices.