Grayscale, a cryptocurrency asset manager, is experiencing a decrease in outflows from its Bitcoin ETF, but experts believe there is still potential for further losses.
Data from Bianco Research and Farside reveals that the Grayscale Bitcoin Trust (GBTC) has seen a total outflow of $7 billion since converting to a Bitcoin ETF on February 16. However, although the rate of outflow has significantly slowed, observers, including Nate Geraci, President of ETF Store, believe that the bleeding may not have come to an end.
Most of the exodus occurred in January, with $5.64 billion leaving GBTC by the end of the month. So far in February, only $1.37 billion has been withdrawn.
In a post on X on February 18, Jim Bianco, the founder of Bianco Research and former Wall Street analyst, suggests that much of the outflow is a result of investors rebalancing their portfolios and shifting to Bitcoin ETFs with lower fees. He notes 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 attributes the continued outflow from GBTC to the fund trading at a significant discount to the Bitcoin market price, approximately 44% lower, when BlackRock filed for its Bitcoin ETF in June 2023. He states, “A lot of money flows into ‘cheap’ Bitcoin.”
Geraci believes that it is still early in the process and predicts that the asset bleed will persist. He also suggests that Grayscale may launch a new spot Bitcoin ETF called “mini-GBTC” with a significantly lower fee.
Additionally, further losses could occur after a judge approved an order allowing bankrupt crypto lender Genesis to sell part of its investments in Grayscale. Court documents reveal that Genesis held approximately $1.6 billion worth of shares in GBTC, the Grayscale Ethereum Trust, and the Grayscale Ethereum Classic Trust.