Approximately $1.1 billion has exited Grayscale’s Bitcoin exchange-traded fund (ETF) in the past three days as traders rushed to exit after a discount reduction.
Key Takeaways
- Grayscale’s spot Bitcoin ETF experiences a substantial outflow of approximately $1.1 billion over three days.
- A notable $594 million outflow occurs on January 16, coinciding with a reduction in the discount of the Grayscale Bitcoin Trust (GBTC).
- Analysts highlight potential discrepancies in calculating flows due to accounting and settlement processes.
- Grayscale’s discount, which fell as low as 1.55% following its conversion to a spot ETF, prompts investors with locked-up funds to exit.
Grayscale’s Bitcoin ETF Faces Significant Outflows
In the last three days, Grayscale’s spot Bitcoin exchange-traded fund (ETF) has witnessed a substantial outflow of around $1.1 billion, with a significant portion, approximately $594 million, occurring on January 16. This trend follows a narrowing discount of the Grayscale Bitcoin Trust (GBTC), prompting traders to exit the fund.
Bloomberg ETF analyst James Seyffart noted inflows into other recently launched Bitcoin ETFs but expressed uncertainty about whether these inflows could compensate for the considerable outflows from GBTC on January 16.
Changing Landscape of GBTC and Bitcoin ETFs
For several years, GBTC offered a profitable trade, allowing investors to borrow money and capitalize on the Grayscale premium. However, the dynamics shifted in February 2021 when the premium turned into a discount.
ARK Invest Initiates Strategic Moves
Simultaneously, ARK Invest, under the leadership of Cathie Wood, has made strategic portfolio adjustments. ARK has started acquiring its recently approved ARK 21Shares Bitcoin ETF (ARKB) while divesting from shares of the Proshares Bitcoin Strategy ETF (BITO) and other tech-focused assets within its ARK Next Generation Internet ETF.
Read More: Experts Predict XRP ETF Next, After BTC ETF Approval!
To Conclude
The recent exodus of approximately $1.1 billion from Grayscale’s Bitcoin ETF, coupled with strategic moves by ARK Invest, underscores the dynamic shifts in the cryptocurrency investment landscape.
The narrowing discount of GBTC has triggered significant outflows, prompting investors to reassess their positions. ARK Invest’s proactive approach in acquiring its Bitcoin ETF and adjusting its portfolio reflects the evolving nature of the market, indicating potential shifts in investor sentiment and strategy within the cryptocurrency space.
