The Grayscale Bitcoin ETF saw record daily outflows as Bitcoin retreated

Written by Susan McGee

(Reuters) – The sell-off in bitcoin continued on Tuesday, accompanied by record outflows from Grayscale's Bitcoin Trust, accelerating asset losses by the fund since it converted to an exchange-traded fund this year.

Grayscale ETFs had a daily record of $642.5 million in outflows on Monday, according to data from BitMEX Research, when bitcoin fell about 4%. The cryptocurrency fell another 2% by mid-afternoon on Tuesday, bouncing off session lows. Tuesday's flows data will be available Wednesday morning.

Investors have unloaded their holdings in the Grayscale fund since it converted into an ETF on January 10. Meanwhile, money flowed into the nine new spot Bitcoin ETFs approved by the SEC on the same date.

Monday's outflows from the Grayscale ETF brought the total to nearly $12 billion since Jan. 10, though bitcoin's 52% price gain helped offset some of those losses. The fund's assets now stand at $27.2 billion, compared to $29 billion on the first day of trading in the new ETFs.

“As the largest and most expensive Bitcoin ETFs currently, taking profits and clawing back money is understandable,” said Todd Rosenbluth, head of research at VettaFi, a market analysis firm.

In a statement, Grayscale said the company expected shareholders to reap gains, engage in arbitrage and liquidate shares to repay creditors, and that this would lead to outflows.

Grayscale CEO Michael Sonnenshein told CNBC that the company will reduce fees on its fund “over time.” The current fee of 1.5% is significantly higher than those charged by the other nine ETF providers. Their fees are around 0.25% although temporary waivers often bring them down to zero.

See also  The United States consulted with Japan and the Netherlands on chip restrictions to China - Sullivan

Most other Bitcoin funds saw weak inflows or little change in their net assets. The lack of new purchases, combined with greyscale outflows, made Monday the lowest single day for bitcoin ETF inflows since late January.

“Money is not going to flow into these ETFs day in and day out,” Rosenbluth said. “It is reasonable for people to take profits after strong selling.”

(Reporting by Susan McGee; Editing by Ira Iosibashvili, William McLean and David Gregorio)

Leave a Reply

Your email address will not be published. Required fields are marked *