On Monday, U.S. Bitcoin exchange-traded funds (ETFs) experienced a surge in investments as the price of Bitcoin (BTC) surged past the $43,000 mark.
Collectively, these ETFs received a net inflow of $255 million, encompassing all ten publicly traded spot ETFs introduced on January 11. This total includes the Grayscale Bitcoin Trust (GBTC), which is the oldest and largest among them, even though it had been consistently experiencing daily outflows in the nine-figure range since its transition into an ETF.
To be more specific, on Monday, BitMEX Research reported that Grayscale saw a net outflow of $191.7 million, marking a significant decrease from the previous week when the fund lost a substantial $640 million in assets.
In contrast, the Fidelity Wise Origin Bitcoin Trust (FBTC) alone attracted a net inflow of $208.2 million, surpassing Grayscale’s outflows.
The BlackRock iShares Bitcoin Trust (IBTC) came in a close second with net flows totaling $198.4 million, while Bitwise and Ark’s ETFs garnered $20 million and $17.2 million in net investments, respectively.
In total, all U.S. Bitcoin ETFs collectively received $1.01 billion in net inflows as of Tuesday. This has elevated the assets under management (AUM) of ETF providers beyond that of silver ETFs in the country, positioning Bitcoin as the second-largest ETF commodity, trailing only behind gold.
Grayscale Outflows Slow Down
Grayscale, which had previously witnessed a loss of over $5 billion worth of Bitcoin in its holdings, now appears to be experiencing a slowdown in its outflow rate. Analysts attribute this shift to some of its early clients taking the opportunity to cash out as the value of its shares was restored to parity with the underlying BTC holdings.
Another significant contributor to the selloff was the now-bankrupt crypto exchange FTX, which sold $900 million worth of GBTC shares once the fund completed its transition into an ETF.
The decreasing volume of the fund suggests that the selling pressure has subsided, with BlackRock’s IBIT ETF seeing trading volumes rivaling those of GBTC for two consecutive trading days this week. On Tuesday, Bitcoin spot ETFs collectively handled $806 million in trading volume, with over $350 million coming from both Grayscale and BlackRock’s funds.
One notable difference is the management fee charged by these funds, with BlackRock’s fee at 0.1%, significantly lower than Grayscale’s 1.5%. This has led many investors to transfer their assets from the Grayscale fund to the BlackRock fund.
Bitwise CEO Matt Hougan highlighted the advantages of Bitcoin ETFs’ low fees, saying, ” $100 million worth of bitcoin fits on a device the size of a thumb drive.” This underscores the benefits of being in the native digital realm, where costs are minimized.