Grayscale Outflows Dominate: Is the Bitcoin ETF Hype Fading?

The commencement of trading for the Spot Bitcoin ETF has stirred discussions, particularly with crypto trader Ran Neuner’s recent insights shared on Twitter. Despite the initial buzz reporting a robust $4.5 billion in trading volume, a closer examination reveals a more intricate reality.

Here’s a deeper dive into what he has to say.

The Nitty-Gritty Figures

Neuner’s tweet meticulously breaks down the Bitcoin ETF’s initial day, shedding light on a significant detail. Contrary to the $4.6 billion trading volume, a substantial $2.3 billion (50%) is attributed to the Grayscale Bitcoin Trust (GBTC).

THE BITCOIN ETF FIRST DAY WAS TERRIBLY UNSUCCESSFUL.
Most people are reporting that $4,5BN was traded , they are not analyzing the data.
If you look at the numbers you will notice that;
– Total trade was $4,6bn
– GBTC was 50% of that $2,3bn
The GBTC numbers were majority… pic.twitter.com/3TIzGzcD1p
— Ran Neuner (@cryptomanran) January 12, 2024

Neuner emphasizes a critical point—this considerable GBTC portion mainly comprises sales and outflows. The higher fees and the locking up of older Bitcoin holdings imply that these numbers do not represent fresh investments into the Bitcoin ETF.

Read More: Shark Tank’s Kevin O’Leary Labels Spot Bitcoin ETFs “Useless”; Here’s Why

Steven Budgen’s Analysis

In response to Neuner’s findings, crypto investor Steven Budgen provides a comprehensive analysis, highlighting three key factors contributing to the Bitcoin ETF’s subdued debut. These include the departure of arbitrages, liquidity concerns, and the notable fees associated with GBTC. Budgen suggests that those exiting GBTC may opt for cash, redirecting investments to alternative ETFs.

First day possibly but if you study this space it was obvious that there would be strong outflows of GBTC for 3 reasons 1). arbitrages left the trade 2). Opportunity to be liquid 3). High fees so many of these who sold will simply sell for cash & open new position in another etf.
— Steven Budgen (bees84) (@ProofOfSteve) January 12, 2024

Neuner and Budgen’s observations underscore potential challenges faced by the Bitcoin ETF on its first day. The emphasis on GBTC outflows, combined with concerns about fees and market dynamics, paints a more nuanced picture of the ETF’s initial trading session.

As the crypto community dissects the data and delves into the nuances of the Bitcoin ETF’s debut, industry observers are keenly awaiting further developments.

Also Read: Bitcoin Or Bitcoin ETF, Which is the Best Buy For 2024?

Source: https://coinpedia.org/news/bitcoin-etfs-opening-day-raises-questions-as-grayscale-dominates-trading-volume/