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There are numerous reasons why Grayscale’s Bitcoin Spot ETF fund is hemorrhaging cash as investors often rush to jump into competing products. Is there an end in sight? And is grayscale okay?
Essentially, after converting from a closed-end fund to a fund of funds. Spot Bitcoin Exchange Traded Fund (ETF) Last January, investors were hitting the redemption button at a rapid pace. Because it’s too fast GBTC Since March 2009, it has experienced the largest outflow among ETFs, exceeding $15 billion.
According to its website, the fund currently holds over 328,012 BTC. This is a $22.6 billion cryptocurrency. GBTC started the year with over 618,000 BTC. This means that on average 5,092 BTC were leaked per day.
If the bleeding continues at this rate, “digital gold” will be depleted by July 8.
There is good news about grayscale. Since outflows have slowed significantly, it is unlikely that GBTC will maintain this pace. Yesterday, only $75 million remained in the fund.
“My assumption is that outflows will slow down from here,” said James Seyffart, ETF research analyst at Bloomberg Intelligence. decryption.
To offset the flow, grayscale contaminated To better compete, we offer another “mini” Bitcoin ETF with lower fees. But while it awaits approval, other funds, such as BlackRock’s hugely popular iShares Bitcoin Trust, are attracting massive inflows. BlackRock funds withdrew the following amounts: $10 billion in new funding raised in one day.
“Time is the enemy now as (mini Bitcoin ETFs) go through the usual regulatory process,” said Todd Sohn, ETF and technology strategist at Strategas Securities. “It will happen,” he added. About that.”
What factors lead to rapid outflow? before hand said decryption Remaining holders wanting to leave this vehicle for cheaper ETFs were part of the reason.
And in addition to high fees, the exodus is being driven by collapsed cryptocurrency companies with exposure to grayscale, such as FTX and Genesis.scratch again Cash for customers.
Despite the leak, BlackRock’s iShares Bitcoin Trust catch up quickly In terms of assets under management, Grayscale’s business model still appears to be fine. The fund holds $21.7 billion and is still generating significant cash flow, according to ETF analysts.
Bloomberg Intelligence ETF analyst Eric Balchunas said: decryption: “I don’t know exactly how much money (Grayscale) you need to run your business, but a $1 billion ETF charging 1.5% is a decent little revenue generator that could generate 22 times more than that. This will be it.”
He added that Bitcoin’s price rise only helps fund managers and subsidizes outflows. He added that a significant plunge in the price of Bitcoin would hurt his business.
However, since the SEC gave approval to the ETF in January, the price of Bitcoin has risen more than 40%. Last month, it reached an all-time high of close to $74,000.
“Considering the power of ETFs and their catalysts, half life Going forward, I think Grayscale will be good for a while in terms of revenue,” Balchunas added.
Seyffart added, “Grayscale appears to be doing OK as a business. They still have over $20 billion in assets.”
For his part, Grayscale said: decryption He said there was nothing to worry about and that this scenario was all expected. It is no doubt thanks to them that Bitcoin ETF overvaluation is hot right now.
At a landmark moment for the cryptocurrency industry last year, one judge said: Grayscale version In the lawsuit, Wall Street’s biggest regulator agreed with the company that it lacked a coherent explanation for rejecting its proposed conversion to an ETF after years of rejection.
The ruling basically clears the way for the SEC to authorize spot Bitcoin ETFs to begin trading on U.S. stock exchanges.
If Grayscale doesn’t take the SEC to court, investors may not be able to pick up a Bitcoin investment product at this time.
“The Grayscale team is very proud of the work we have done to grow GBTC into the world’s largest Bitcoin investment vehicle and pave the way for an all-spot Bitcoin ETF to come to market.” said the spokesperson. Decrypt.
editor Ryan Ozawa.
