Grayscale has lost nearly 50% of GBTC within three months after bitcoin spot ETF approval.
The Grayscale Bitcoin Trust (GBTC) was approved earlier this year alongside other Bitcoin Exchange-Traded Funds (ETFs) by the United States Securities and Exchange Commission (SEC). GBTC is invested in bitcoin, making it easier for investors to acquire BTC without going through buying, selling, and protecting their investments on the blockchain.
Grayscale Bitcoin Holdings and Outflow
After the SEC approved the Bitcoin spot ETF in January, GBTC started trading publicly, holding some 620,000 bitcoins. Grayscale charges 1.5% management fees for its Bitcoin Trust Fund, which is higher than the average price. This could lead to lower or no returns for investors, especially in a bearish market. Many investors have exited GBTC, shifting their investments to other Bitcoin ETFs like Fidelity’s FBTC and Blackrock’s IBIT.
While other publicly traded ETFs like BlackRock have recorded many inflows, Grayscale continues to record massive outflows. Two weeks ago, an outflow of about $643 million was recorded in a day. As of the end of March, GBTC holds only 335,154 bitcoins after selling about 284,846 before the first three months after launch. Grayscale now has only 54% of its initial amount of bitcoins.
Grayscale CEO to Control Outflows
To control the outflow of GBTC, Michael Sonneshein, CEO of Grayscale, has announced a reduction of GBTC management fees anytime soon as the bitcoin spot ETF market continues to grow and gain popularity. However, he has not specified the date of the reduction or how many percent will be reduced.
In addition, Grayscale has applied to the SEC to approve a new ETF. When approved, the new Grayscale Bitcoin Mini Trust ($BTC) will trade with lower management fees and be able to compete with other bitcoin ETFs in the market. Some percentage of the existing GBTC will back the Mini GBTC.
After trading for nearly three months, the bitcoin ETF market has recorded many inflows. According to Farside, over $12 billion has been inflowed into bitcoin ETFs. US spot bitcoin ETFs now hold more than four percent of the total bitcoin supply.