Bitcoin ETFs had their first day of net negative outflows for the month of February on Wednesday– a possible sign that hype around the investment vehicles is starting to die down.
According to data compiled from BitMEX Research, the Grayscale Bitcoin Trust (GBTC) suffered $199.3 million of outflows on Wednesday, marking its largest daily outflow since January 30. This outstripped inflows to all other Bitcoin ETFs combined, with many seeing zero flows on the day.
Grayscale Bitcoin ETF Returns To Selling
By comparison, BlackRock’s fund saw $96.5 million of flows, and Fidelity had $52.5 million of flows. In total, all ETFs experienced a net outflow of $35 million.
The last net outflow day for the ETFs was on January 25, while the crypto market was still in “sell the news” mode after the ETFs went live just two weeks prior. BTC traded for roughly $39,900 at the time, but has since rocketed to $52,000 amid a strong wave of ETF inflows over the following month.
Grayscale has suffered nothing but outflows since converting into an ETF, with many early investors cashing out on a former arbitrage between the value of its shares and its underlying BTC. Meanwhile, those trading back into BTC have little incentive to buy back GBTC now that BlackRock’s ETF is available, whose shares carry a much lower management fee and trades with rivalrous volume.
This is the first outflow day for the group since January 25th.
If you want to view this chart on the terminal it can be loaded by anyone at {G #BI 124590<GO>}. pic.twitter.com/2wAhmL63f0
— James Seyffart (@JSeyff) February 22, 2024
Where Is The Sell Pressure Coming From?
That’s not all: bankrupt crypto lender Genesis – which shares a parent company with Grayscale in Digital Currency Group (DCG) – was approved earlier this month to liquidate over $1.3 billion worth of its GBTC holdings.
“Court approved the sale and then GTBC outflows picked up after weeks of declines,” ApolloSats co-founder Thomas Fahrer tweeted. “Can’t be certain but I’d say there is very high likelihood they’ve already started selling.”
Since launch, Bitcoin ETFs have absorbed $5 billion in net flows, or 104,799 BTC.
On Thursday, the European Central Bank published a blog post dismissing Bitcoin despite the ETFs, characterizing the asset’s rally following their approvals as a dead cat bounce.
“Bitcoin has failed on the promise to be a global decentralized digital currency and is still hardly used for legitimate transfers,” the central bank wrote. “The latest approval of an ETF doesn’t change the fact that Bitcoin is not suitable as a means of payment or as an investment.”
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