Top Performers in Net Inflows

According to early data from Farside Investors, BlackRock’s iShares Bitcoin Trust (IBIT) ranked second with $274 million, while the Fidelity Wise Origin Bitcoin Fund (FBTC) received the highest inflow at $378.7 million.

With $138.7 million in net inflows, the ARK 21Shares Bitcoin ETF (ARKB) ranked third-best according to Farside statistics.

With a record $1.04 billion, it is the greatest net inflows the funds have seen since March 12. One day later, on March 13, Bitcoin reached an all-time high of $73,679.

Grayscale Bitcoin Trust and Market Reactions

Since it changed from a closed-end fund to a spot ETF in January, Farside data revealed that the Grayscale Bitcoin Trust (GBTC) witnessed a rare inflow day at $28.2 million, the sixth time it has received an inflow.

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With its high management fee of 1.5% and reduced discount that saw many investors see a chance to escape, GBTC has experienced nearly $17.8 billion in net withdrawals.

Originally holding 620,000 BTC when the first Bitcoin ETFs debuted, Grayscale’s Bitcoin fund has dropped to 285,481 BTC, valued at $20.2 billion, per Apollo Bitcoin Tracker.

Industry Reactions and Market Impact

Responding to Bitcoin detractors on X who said the Bitcoin ETFs would find little demand, ETF Store president Nate Geraci shot back.

Geraci wrote: “I was advised some months ago that all of the ‘degen retail’ investors who wanted to buy had already done so, and there was nobody left. How would this be?”

Bloomberg ETF analyst Eric Balchunas wrote on X that it was “big-time flows all around today for The Ten,” the Bitcoin ETF bar Hashdex’s, which joined the market months after the others had started and has battled to see inflows.

With each issuer posting no flows for June 4, the Bitcoin ETFs from Invesco Galaxy, Franklin Templeton, WisdomTree, and Hashdex had no interest.

It comes as CoinGecko reports Bitcoin has rebounded 2.9% to $71,000 over the past 24 hours.

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Friday saw an additional $63 million added, according to Farside’s count.

For individuals seeking to invest in bitcoin without actually buying the cryptocurrency, the Grayscale product has long been the go-to traditional investment vehicle. However, nine competing spot bitcoin ETFs entered trading in January, along with its conversion to an easier-to-trade ETF.

Due to its much-increased fees, GBTC saw its investors withdraw billions of dollars. Data obtained by CoinDesk shows that the fund’s bitcoin holdings have decreased from over 600,000 bitcoin to approximately 290,000 bitcoin.

Even if the net GBTC withdrawals streak ended on Friday, the fund is still competing with BlackRock’s iShares Bitcoin Trust (IBIT) for the title of largest bitcoin ETF. GBTC’s assets currently stand at $18.1 billion, while IBIT’s are $16.9 billion. GBTC began the month with over $26 billion, whereas IBIT, which is presently in second place, began with $0.

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What is GBTC?

Grayscale Bitcoin Trust is a digital currency investment product that gives the option to invest in Bitcoin in the form of shares, following a more traditional approach. Unlike a direct investment in Bitcoin, which may require more attention and knowledge, GBTC allowed the investors a more simplified access to Bitcoin. Recently, in January 2024, the SEC approved Grayscale‘s application to turn the trust into an ETF.

Genesis’s Purchase

Genesis sold 36 million shares of GBTC at a price of $38.50, along with Ethereum trusts worth of $203 million. The total sale was about $2.1B, allowing the purchase of 32,041 Bitcoins on April 2 at a price of $65,685. Genesis’s purchase comes after Coinbase’s statement, “Our view is that much of these funds will likely remain within the crypto ecosystem, contributing to a neutral overall effect in the market.”. With this purchase, Genesis plans to settle its debt with Gemini Earn creditors.

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Grayscale GBTC Sees Outflow, Newer Funds Shine

However, the picture isn’t entirely rosy. Farside data reveals that the Grayscale Bitcoin Trust (GBTC) experienced its third consecutive double-digit outflow, this time amounting to $79.3 million. This pushes its total net outflow to -$15,306.4 billion.

Despite this, newer Bitcoin ETFs are attracting significant inflows. BlackRock’s iShares Bitcoin Trust (IBIT) registered a robust net inflow of $144.0 million, bringing its total net inflow to a positive $14,460.3 billion.

First Inflow for ARKB, Strong Day for HODL

Ark Invest’s ARKB ETF also recorded its first net inflow since March 28th, adding $12.0 million to its total net inflow of $2,233.5 billion. Similarly, VanEck’s HODL ETF witnessed its strongest net inflow since March 28th, with $15.5 million in new investments. This brings its total net inflow to $461.7 million.

Overall Positive Trend for Bitcoin ETFs

Despite the outflow from Grayscale, the combined net inflow across all Bitcoin ETFs now stands at a positive $12,303.6 billion. This data reflects the continued positive momentum in the digital asset market, with investor interest shifting towards newer Bitcoin ETF offerings.

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Grayscale Bitcoin Trust (GBTC) Sees Easing of Selling Pressure

While the Grayscale Bitcoin Trust (GBTC) experienced outflows of $104.9 million (1,482.8 BTC), this figure marks the smallest outflow since March 12th. This suggests a potential slowdown in selling pressure for GBTC. Despite these outflows, BitMEX data indicates that GBTC has seen a total of $14.7 billion in outflows (283,937 BTC) year-to-date.

Strong Inflow Days for Bitwise and VanEck ETFs

Other Bitcoin ETFs enjoyed significant inflows. Bitwise ETF (BITB) had a particularly strong day, attracting $67.1 million (949.3 BTC), its highest daily inflow since March 4th. Bitwise has now accumulated a total of $1.6 billion in inflows (31,749 BTC).

The VanEck ETF (HODL) also saw a surge in inflows, reaching $20 million (283 BTC), its best day since March 12th. HODL has now amassed a total of $439 million in inflows (7,125 BTC).

Overall Positive Trend for Bitcoin ETFs

BitMEX data reveals a total net inflow of $12.1 billion for Bitcoin ETFs, representing 212,852 BTC. This positive trend suggests growing investor appetite for Bitcoin exposure through regulated exchange-traded funds.

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Grayscale Bitcoin Trust (GBTC) Drags Down Market

Grayscale Bitcoin Trust (GBTC), the incumbent player in the Bitcoin ETF market, emerged as the primary culprit behind the outflows. Investors pulled a substantial $2 billion from GBTC, significantly outweighing the positive inflows of $1.1 billion observed in new US ETF issuers.

Bloomberg’s cryptocurrency strategist, James Seyffart, attributes the net outflows primarily to recent bankruptcy proceedings. He suggests that selling activities by Gemini and Genesis, likely associated with the bankruptcies, were the major drivers behind the outflows from GBTC.

Outflows Expected to Ease

Seyffart anticipates a potential slowdown in outflows moving forward. With the bankruptcy-related selling pressure likely to subside, a return to inflows could be on the horizon. Estimates suggest that Gemini and Genesis may have roughly $3.9 billion worth of GBTC remaining to offload.

High Fees Continue to Plague GBTC

One of the longstanding criticisms of GBTC has been its high gas fees, which have deterred investors and contributed to the outflows. Grayscale CEO Michael Sonnenshein has acknowledged this concern and hinted at upcoming efforts to reduce fees.

Bloomberg ETF strategist Eric Balchunas expressed skepticism regarding the possibility of significant inflows returning to GBTC in the future. He suggests that smaller, newer Bitcoin-based ETFs with lower fees (under 30 basis points) might be more attractive to investors.

Balchunas raises a critical point regarding the potential presence of “mirage assets” or “tax hostages” within GBTC’s AUM (Assets Under Management). This implies that a significant portion of GBTC’s holdings might not represent readily tradable positions for many investors.

Altcoins See Silver Lining

While Bitcoin dominated the outflows, with a staggering 96% share ($904 million), altcoins offered a glimmer of hope. The report by CoinShares highlights positive inflows for several altcoins, including Polkadot ($5 million), Avalanche ($2.9 million), and Litecoin ($2 million). Overall, the altcoin space collectively recorded net inflows of $16 million, providing some balance to the week’s overall trend.

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Bitcoin (BTC), the leading cryptocurrency, is up 4.9% trading at $67,300, while Ether is 4.7% higher, reaching above $3,400.

Analysts credit the market’s positive momentum to BlackRock’s recent announcement of a fund targeting tokenized products on Ethereum, known as BUIDL.

Short positions betting against Bitcoin and Ether are facing substantial losses, with data from CoinGlass indicating over $100 million in leveraged futures positions liquidated in the past day, including $60 million in short BTC positions and $42.8 million in short Ether positions.

Additionally, selling pressure from the Grayscale Bitcoin Trust (GBTC) appears to be easing, as Genesis’ sale of shares slows down, contributing to an uptick in GBTC outflows.

Macro-economic factors are aligning bullishly, with central banks around the world initiating an easing cycle. Notably, the Swiss National Bank (SNB) and the Central Bank of Mexico have cut interest rates unexpectedly, while the Federal Reserve, European Central Bank, and Bank of England have signaled plans for liquidity easing in the coming months.

Despite anticipation of a market correction, the medium-term outlook appears optimistic for various assets including equities, residential real estate, gold, and Bitcoin. Founder and manager of the Blokland Smart Multi-Asset Fund expressed confidence in this trend, noting the fresh all-time highs already reached by equities and gold.

The post Bitcoin and Ether Surge as Global Easing Cycle Begins appeared first on Coin Engineer.

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According to the filing, the assets, which are owned by Genesis, a subsidiary of Digital Currency Group, include approximately $1.4 billion worth of Grayscale Bitcoin Trust shares, approximately $165 million worth of Grayscale Ethereum Trust shares, and approximately $38 million worth of Grayscale Ethereum Classic Trust shares.

The company also requested that the deadlines for consideration of the sale motion be shortened so that it can be heard at the bankruptcy court’s next hearing scheduled for Thursday, February 8.

The GBTC shares in question constitute the initial collateral that Genesis transferred to Gemini as part of its Gemini Earn program and some shares acquired through the bankruptcy of Three Arrows Capital.

The company is also seeking to legally claim an additional 31,180,804 shares (worth approximately $1.2 billion) that were pledged to Gemini but never transferred; the ownership of the shares is currently a matter before the court.

In a statement on its website, Gemini called the motion “an important step forward following the approval of Grayscale Bitcoin Trust (GBTC) as an exchange-traded product (ETP) on January 10.”

Earlier this week, Genesis agreed to pay a $21 million fine to the SEC from its post-bankruptcy funds to settle the agency’s lawsuit against the company for operating the Gemini Earn program.

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Following the approval of ETFs by SEC Chairman Gensler, investors have turned their attention to Ethereum. Thousands of investors are waiting for a similar decision to come from this side.

Gary Gensler made the following statement yesterday;

“As I said two weeks ago, our decision on Bitcoin exchange-traded products is limited to this single non-security commodity and should not be interpreted in any other way.

In this respect, the public is also now better informed. They are now pooled in exchanges rather than being traded in over-the-counter markets. 10 or 11 of them started trading at the same time, which created competition. Investors benefited from lower fund fees thanks to this competition.”

All ETFs approved by the SEC began trading on January 11. The total trading volume of the funds, including Grayscale Bitcoin Trust, has exceeded $20 billion.

Gensler believes that his approval has led to a better understanding of the cryptocurrency market.

The SEC filed a lawsuit against Binance and Coinbase exchanges last year. The reason for the lawsuit was that they were operating as exchanges without registration. Sharing his views on the recent hearings, Gensler said the following:

“Looking more generally than a single case, I think investors should know that if they are interested in investing in crypto securities, these crypto security tokens do not always adequately inform them and token operators who do not act in accordance with the law do not inform themselves either.”

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The buying frenzy is not limited to just a few major players. Since their initial launches, nine spot ETFs (excluding Grayscale) have purchased a total of approximately 68,500 BTC (worth $2.8 billion). This buying pressure is partially offset by the sales of 38,000 BTC by Grayscale Bitcoin Trust (GBTC) since its conversion to a spot ETF.

30,496 #Bitcoin was bought since ETF Launch.

Excluding $GBTC (selling driven by high fees vs others), the 9 ETFs bought 68,442 $BTC – a staggeringly large number.

Only 900 #Bitcoin is mined daily (dropping to 450/day in April)

— CC15Capital (@Capital15C) January 18, 2024

So what’s behind the sudden surge in interest in Bitcoin ETFs? Analysts point to the convenience and familiarity that these funds offer traditional investors, who can gain exposure to crypto without having to navigate the complexities of crypto exchanges.

Excitement is at an all-time high. Both BlackRock and Fidelity’s Bitcoin ETFs are already notable for their assets under management, which exceed $1 billion. BlackRock is among the top five US ETFs in terms of weekly inflows, even outpacing the Vanguard 500 Index Fund.

This stands in stark contrast to GBTC, which has seen outflows of over $445 million since its conversion. Could this be a sign that investor preferences are shifting to the newer and more accessible spot ETFs?

The future is uncertain, but one thing is for sure: the arrival of spot Bitcoin ETFs has brought new energy to the cryptocurrency market. With major players like BlackRock and Fidelity backing Bitcoin, we could be on track for mainstream adoption.

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