Grayscale Bitcoin Trust withdrawals hit record low. Has sales stopped?

Grayscale Bitcoin Trust withdrawals on Wednesday fell to their lowest daily level since the fund converted to a physical Bitcoin ETF in January, ultimately stifling optimism that the fund will stop selling significant amounts of Bitcoin. It aroused me.

Invest only in ETFs Sold approximately $17.5 million worth of BTC.This compares to well over $150 million per day over the past three trading days. The sharp slowdown has left some Bitcoin users on Crypto Twitter (aka You can.

Exactly three months after GBTC began trading as a Bitcoin spot ETF, the fund has now lost over 300,000 BTC. This represents almost half of January’s holdings. That’s despite constant inflows into competing funds run by BlackRock and Fidelity and the price of Bitcoin, which has surged 58% this year. So who exactly is abandoning GBTC and why?

Much of the outflow appears to have come from the bankruptcy estates of FTX and Genesis, which were each given the power to liquidate over $2 billion in GBTC holdings in the past few months. According to Arkham’s data: Genesis liquidated more than 32,000 BTC ($2.1 billion) worth of shares in March.

Management fees also play an important role. Grayscale charges investors 1.5% per year on their investments, while iShares Bitcoin Trust (IBIT) charges 0.25%. This gives potential Bitcoin buyers little incentive to buy GBTC over other funds and potentially leads current investors to switch providers.

In other words, on-chain analysis shows that Grayscale’s outflow is not a temporary anomaly, but a completely natural phenomenon that has also been observed in previous Bitcoin bull markets.

“GBTC works exactly the same as selling HODLers.” wrote Glassnode senior analyst James Check wrote on Twitter Tuesday.

In an accompanying video presentation, Check explained that most of the coins held by GBTC entered the fund in the summer of 2021. Each buyer is now enjoying huge profits and has naturally started taking chips off the table. Period holders typically do so when Bitcoin is breaking previous all-time highs.

“It doesn’t matter whether the coins come from a bankrupt estate, a disgruntled holder or an arbitrageur,” he argued.

Despite starting out about $30 billion ahead of its rivals, there is now less than a $4 billion gap between them and BlackRock’s iShares Bitcoin Trust.

Editor Stacey Elliott