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Cryptocurrency News Articles
Grayscale's Bitcoin Trust Records First Inflow Since ETF Conversion, Signaling Market Shift
May 06, 2024 at 07:53 am
Grayscale's Bitcoin Trust (GBTC), the largest Bitcoin ETF, has reversed its outflow trend with a net inflow of $63 million, marking its first positive inflow since its conversion to an ETF in January. This shift, attributed to factors such as reduced outflows and increased inflows into other Bitcoin ETFs, has raised optimism among investors, with some suggesting it could signal Bitcoin's potential to reach new highs. However, uncertainty remains due to regulatory and market challenges.
Grayscale's Bitcoin Trust Reports First Inflow Since Inception
New York, May 5, 2023 - Grayscale's Bitcoin Trust (GBTC), the world's largest Bitcoin exchange-traded fund (ETF) by assets under management, has finally recorded its first positive net inflow since its conversion to an ETF in January 2024. This development marks a significant shift from the fund's previous trend of persistent outflows.
On May 3, GBTC saw a net inflow of $63 million, according to data from Farside Investors. This marked the first positive net flow for the fund since its ETF conversion, which coincided with the launch of 11 new spot Bitcoin ETFs in the United States.
The inflow has halted the streak of consistent outflows that GBTC had experienced since becoming an ETF. Several factors had contributed to these outflows, including the fund's relatively high annual management fee of 1.5%, which is significantly higher than other Bitcoin ETFs that charge less than 1%.
Additionally, the sell-off of GBTC shares by bankrupt cryptocurrency companies such as FTX and Genesis had also driven the outflows. FTX sold approximately $1 billion worth of GBTC shares, while Genesis liquidated approximately 36 million shares, valued at $2.1 billion, to purchase Bitcoin.
The May 3 inflow coincides with a broader positive trend in the Bitcoin ETF market. On the same day, the market as a whole experienced a net inflow of $378 million. Notable performances included Franklin Templeton's Bitcoin ETF (EZBC), which recorded its highest-ever inflow of $60.9 million, and Fidelity's Bitcoin ETF (FBTC), which led the day with $102.6 million in inflows.
While the inflow is a positive sign for GBTC, it is important to note that its rapid growth is adding competitive pressure. Grayscale's Bitcoin Trust currently has $18.1 billion in assets, while its rival IBIT has reached $16.9 billion. IBIT began with zero assets in January, while GBTC had over $26 billion.
The shift from outflows to inflows in both GBTC and the broader Bitcoin ETF market has brought a sense of optimism among investors, with some suggesting that this could be an early indicator of Bitcoin reaching new all-time highs. However, it remains to be seen if this momentum will continue, given the ongoing regulatory and market uncertainties.
Grayscale Confident About SEC Approval of Spot Ethereum ETF
In related news, Grayscale Investments remains optimistic about the U.S. Securities and Exchange Commission (SEC) approving its spot Ethereum (ETH) exchange-traded fund (ETF). This confidence stems from the similarities between the approval processes for spot Bitcoin ETFs and spot Ethereum ETFs.
Craig Salm, Chief Legal Officer at Grayscale, highlighted the fundamental similarities in the operations of spot Bitcoin and spot Ethereum ETFs, with the key difference being the underlying asset. Salm believes this consistency should make the SEC's review process for the spot Ethereum ETF more straightforward.
However, Bloomberg ETF analysts Eric Balchunas and James Seyffart have reduced their expectations for spot Ethereum ETF approval in May to just 25%. Balchunas suggested that the SEC's apparent lack of engagement could be deliberate rather than merely a delay.
Despite these concerns, Grayscale is confident that the SEC will approve its spot Ethereum ETF. The company argues that the logic used to justify the approval of spot Bitcoin ETFs applies equally, if not more strongly, to the case for spot Ethereum ETFs.
The SEC is expected to make a decision on VanEck's spot Ethereum ETF application by May 23, with the fate of other applicants expected to be announced around the same time. Companies like BlackRock, VanEck, Fidelity, and Grayscale are all actively pursuing approval for their spot Ethereum ETFs.
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