Grayscale Bitcoin Fund Sees Record Low Outflows of $22 Million

The tide of assets fleeing crypto asset manager Grayscale’s Bitcoin Trust (GBTC) fund appears to be showing faint signs of easing. GBTC saw net outflows slow for a third straight day to a record low $22.4 million on February 26th.

That’s down sharply from a peak daily outflow of $640 million hit in January during an extended bleed of the newly converted Bitcoin spot ETF.

TLDR

• Grayscale’s Bitcoin Trust (GBTC) saw record low outflows of $22.4 million on Feb 26, down from $640 million on Jan 22
• This marks the 3rd straight day of slowing outflows, raising hopes the bleeding of assets from GBTC is nearing an end
• However, GBTC has seen 31 consecutive days of outflows totaling $7.47 billion since converting to an ETF on Jan 11
• Other Bitcoin spot ETFs are faring better, hitting a 2-week high in combined inflows of $515 million on Feb 26
• GBTC continues to lose market share with its high 1.5% fees, while competitors like BlackRock and Fidelity lead in assets under management

While the reduced pace of exits from Grayscale is encouragement for shareholders, the world’s largest Bitcoin fund still marked its 31st consecutive day of negative flows.

Over $7.47 billion worth of value has drained from GBTC since its long-awaited ETF conversion on January 11th.

The prolonged outflows stand in stark contrast to nine other newly approved Bitcoin spot ETFs that quickly hoovered up billions in fresh investment capital over the same period.

As GBTC struggles under the weight of a relatively high 1.5% expense ratio and liquidations from bankrupt crypto lending firms, rivals like BlackRock and Fidelity cement leads in the crypto ETF space.

The Bitcoin ETF flow data for 26th Feb 2024 is starting to come in:

* GBTC outflow $22.4m, a record low outflow
* EZBC strong, with $7.9m inflow

Follow the action live here:https://t.co/4ISlrCgZdk pic.twitter.com/2lfSo6E5pz

— Farside Investors (@FarsideUK) February 26, 2024

Industry analysts pin fading hopes on a potential end to the outflows on GBTC flashing a positive inflow day to signal exhausted selling pressure.

But that milestone still appears distant given ongoing stiff fee competition from upstart Bitcoin ETFs charging around 0.5-0.7% compared to Grayscale’s elevated Legacy Trust conversion costs.

February brought some relief at least with outflows slowing by over 90% from January’s torrent. Just $1.8 billion has exited GBTC this month so far. Bitcoin’s rising tide and bounce off mid-winter lows probably assisted the fund in stemming losses.

Still, 31 straight negative flow days makes for an ugly optics problem that Grayscale must remedy before assets under management completely evaporate.

With competitors now boasting over $15 billion in their funds, time may be running short for GBTC to undo reputational damage and offer the fee and structural incentives to compete in the new ETF landscape. The fund’s early supporters are waiting to see light at the end of the tunnel.