Grayscale Outflows Abate
The freshly approved Bitcoin ETFs, or exchange-traded funds, are settling in a positive flow. This is despite Grayscale selling vast quantities of Bitcoin from their GBTC fund. Since the Bitcoin ETFs were approved, there has been a battle between the major ETFs: IBIT, managed by BlackRock; FBTC, managed by Fidelity; and GBTC, Grayscale’s flagship fund.
Grayscale has seen large outflows, totaling over $6 billion, as fund holders likely move their assets to the new, cheaper IBTC and FBTC alternatives. In addition to this, evidence shows that the GBTC outflows are abating. The fund, which saw 50% of the total ETF market volume in the first half of January, is now below 30% of the total volume, with IBIT and FBTC gaining the majority of the lost volume.
Inflows Outweigh Outflows
Last week’s flows for GBTC sat at $926 million. In contrast, IBIT and FBTC saw inflows of $884 million and $674 million, respectively. If accounting for all fund investors moving from GBTC to alternatives, the net inflows still totaled over $707 million for the week. This totals over $1.5 billion since the funds’ inception. As is known already, capital moving from one fund to another is not the case. The now-defunct exchange FTX has been profit-taking on its GBTC holdings in order to pay off debtors. This shows that the inflow is a much higher rate of fresh capital than can be extrapolated from the raw data.
One takeaway from this is that institutional investment in Bitcoin is already here. As retail investors ‘sell the ETF news’ the capital flow for the decentralized asset shows strength at the start of 2024.
Bitcoin ETF Price Effect
Bitcoin’s price range has stayed steady into the first week of February. This shows how the market can absorb the retail and GBTC selling with this capital exchange. Price targets for Q3 2024 show Bitcoin can reach $52,000 if the flow trend continues as it currently is. Once the GBTC fund stabilizes, a return to the all-time high of just under $70,000 is likely by the end of 2024.
