GBTC with inflows for the first time!
Grayscale ends four-month negative streak
After a series of outflows, the Grayscale Bitcoin Trust (GBTC) recorded net inflows for the first time yesterday, May 3, 2024. Considering almost four months of continuous outflows that started after the conversion to a Bitcoin ETF in January, many market observers were surprised by this recent news.
Inflows in the millions
According to statistics from Farside Investors Grayscale Investments recorded positive net inflows for the first time since January 11, the day GBTC was converted into an ETF. Outflows had previously amounted to around USD 17.5 billion. Although the other Bitcoin ETFs also recorded inflows yesterday, GBTC was already in second place after Fidelity's FBTC (USD 102.6 million) with around USD 63 million and recorded almost five times as many inflows as the industry leader BlackRock with its IBIT (USD 12.7 million). Some experts, such as Bloomberg analyst Eric Balchunas, could not believe their eyes. At 𝕏 he wrote:
Holy crap, $GBTC had inflows today. The 80 or so day dry spell is finally over. I had to check my eyes and double check the data, but it's true.
Eric Balchunas, ETF expert
Series of outflows stopped
A series of outflows characterized the Grayscale Bitcoin Trust over several months, which was mainly due to the comparatively high management fee. While competing products were significantly cheaper, many investors decided to withdraw their funds, even though GBTC was by far the largest of the ETFs with around USD 27 billion in assets under management. The sell-offs by the insolvent crypto companies FTX and Genesis also played a major role in the negative series. The two bankrupt companies sold a large number of GBTC shares in recent weeks in order to pay off their creditors.
Ironically, BlackRock's IBIT, with around USD 15.5 billion in assets under management, was or is about to replace GBTC, which now only manages around USD 17.5 billion after the outflow series, as the largest ETF.
$GBTC was just about to lose its crown as the largest Bitcoin ETF to $IBIT and then out of nowhere, it has its first inflow day!!! https://t.co/cK4b7bgT3G-
BitMEX Research (@BitMEXResearch) May 3, 2024
Possible reasons for the inflows
Possible reasons for the inflows can be found in various speculations. On the one hand, it is assumed that the selling pressure from Genesis and FTX has eased considerably. As already mentioned, these sales had a significant impact on the outflow of funds from the Grayscale Bitcoin Trust. On the other hand, it is assumed that the recent inflows are also due to the fact that Grayscale has intensively advertised GBTC. Normie investors, i.e. less informed or inexperienced investors, may not have paid too much attention to the different fee structures of Bitcoin ETFs and instead simply chose the largest ETF on the market. After all, GBTC is still the largest Bitcoin ETF, and despite the higher management fee, investors may have viewed the "market leader" as a safe and reliable choice without comparing fees more closely. Possible market manipulation or purchases by Barry Silbert and his family office have also been debated on social media. However, we cannot and do not want to answer the question of which is the most realistic or correct explanation at this point.
It's either 1) friends and family (Barry's family office?) or 2) some entity wanted to buy and didn't want to wait for compliance or their broker to turn on the other tickers or 3) someone was asleep at switch and didn't look at fees-
Roger Sterling (@gammatime) May 3, 2024
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