Bitcoin ETFs see positive inflows as GBTC pressure eases
On the 12th trading day, the outflows of GBTC were lower than the inflows of the Fidelity ETF, leading to a significant reduction in the conversion pressure from Grayscale. Although the community welcomed the launch of the spot Bitcoin ETFs, the market had to bear the conversion pressure from Grayscale’s GBTC, which caused the Bitcoin price to drop sharply.
In recent days, the community has been holding their breath as they watched the outflows of hundreds of millions of dollars per day from Grayscale. Meanwhile, the remaining 10 ETFs, although having positive inflows, were not enough to offset the negative outflows of GBTC.
Many experts reassured that this was a normal phenomenon as investors holding GBTC were trying to exit the fund, partly to take profits after a long holding period since 2021-2022, and partly to avoid the management fee of 1.5% per year of Grayscale by switching to other ETFs.
Bitcoin ETF Flow – Day 12
GBTC flow data out
— BitMEX Research (@BitMEXResearch) January 29, 2024
When investors no longer had the need to exit and the other ETFs had strong inflows, the selling pressure would no longer have an impact.
Finally, on the 12th trading day of the spot ETFs, the market recorded positive inflows after many days of waiting. This encouraging signal indicated that the exit demand of GBTC investors had decreased, giving way to the steady demand from investors who wanted to join the market.
This is what the fee table looks like now: pic.twitter.com/LPvd6YwGWJ
— James Seyffart (@JSeyff) January 29, 2024
The BTC price reacted positively as it was no longer threatened by the conversion pressure, rising slightly to around $43,400. On the other hand, the lower-volume ETFs were trying to increase their competitiveness in the eyes of investors. Invesco and Galaxy Asset Management would cut their joint fund fee for BTCO from 0.39% to 0.25% – a fee level equal to the average. This move hoped to attract more investors to BTCO when the fund’s AUM was only about $208 million. Meanwhile, the leading rival was BlackRock’s IBIT with an AUM of $2 billion.
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