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The Nine Bitcoin ETFs Surpasses GBTC with a Remarkable +$623M Inflow Amid a -$590M Outflow Last Friday

Bitcoin, the world’s first and most popular cryptocurrency, has finally entered the mainstream of the exchange-traded fund (ETF) industry. On January 10, 2024, the Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs for trading in the U.S., following a successful lawsuit by Grayscale, the sponsor of GBTC.

According to Eric Balchunas, Senior ETF Analyst for Bloomberg, the spot Bitcoin ETFs have seen strong inflows and growth in assets under management (AUM) since their launch, while GBTC has seen massive outflows and decline in AUM. Balchunas tweeted on January 20, 2024, that the spot Bitcoin ETFs collectively received $623 million in net inflows on Friday, January 19, marking their third best day since inception. The total net flows for the spot Bitcoin ETFs stood at $1.2 billion, while their AUM reached $4 billion, up from $2.5 billion at the end of 2023.

Source: Eric Balchunas

In contrast, GBTC saw a $590 million outflow on Friday, bringing its total net outflows to $2.8 billion since October 2021. GBTC’s AUM dropped to $26 billion, down from $32 billion at the end of 2023. Balchunas noted that the outflows from GBTC were not necessarily going to the spot Bitcoin ETFs, as much of it was driven by FTX, a crypto exchange that offered a way to arbitrage the discount of GBTC to its NAV. FTX allowed traders to buy GBTC at a discount, sell a synthetic version of GBTC at NAV, and lock in the profit.

Balchunas also suggested that the inflows to the spot Bitcoin ETFs were largely due to their reach, distribution, and hustle, rather than their inherent advantages over GBTC. He said that the proportionality of the flows to the size of the firm was almost perfect, indicating that the larger and more established ETF providers, such as BlackRock, Fidelity, and ARK Invest, had more success in attracting investors.

Balchunas also responded to a user on X, a social media platform, who asked him how much of the inflows and outflows of the spot Bitcoin ETFs and GBTC were the same transaction or the same capital flow from one to another. Balchunas said that it was impossible to get the exact data, but based on anecdotal inquiries, he estimated that maybe 10% of the GBTC outflows moved to one of the spot Bitcoin ETFs, which was smaller than people think.

The data from Balchunas shows that the spot Bitcoin ETFs are emerging as a leading contender in the Bitcoin investment space, challenging the dominance of GBTC and Bitcoin futures ETFs. The spot Bitcoin ETFs are expected to grow further, as more investors seek exposure to the cryptocurrency market, and more ETFs are launched and approved. The spot Bitcoin ETFs may also have a positive impact on the price and adoption of Bitcoin, as they increase the demand and liquidity for the cryptocurrency.

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