Crypto Investment Products See $942 Million Outflows, GBTC Plays Spoilsport

Highlights

GBTC $2 Billion Outflows were from major selling by Gemini and Genesis.
Bitcoin alone contributed to 96% of the total outflows last week.
Altcoins like Polkadot, Avalanche, and Litecoin registered net inflows during last week.

According to data from CoinShares, digital asset investment products experienced unprecedented weekly outflows, reaching a total of US$942 million. This marks the first outflow after a consecutive 7-week period of inflows, which had amounted to US$12.3 billion. The outflows from Grayscale Bitcoin ETF GBTC stood to the tune of $2 billion.

GBTC Plays the Spoilsport

Recent data reveals that new ETF issuers in the US experienced inflows totaling US$1.1 billion. Thus, they offered a partial offset to the substantial outflows of US$2 billion observed from incumbent Grayscale Bitcoin ETF GBTC during the same period.

According to Bloomberg’s cryptocurrency strategist James Seyffart, the net outflows from the Bitcoin ETFs last week happened primarily due to bankruptcy proceedings. These outflows were predominantly linked to selling activities by Gemini and Genesis.

Seyffart anticipates a deceleration in outflows over the next week, as the selling pressure associated with bankruptcy-related activities is expected to ease. The group is estimated to have approximately $3.9 billion worth of Grayscale Bitcoin Trust ($GBTC) to offload.

Cointucky Derby update for the #bitcoin ETFs. Last week was -$888 million for the group. Outflows were likely related to bankruptcy — they were mostly Gemini/Genesis selling. *Expecting* that to slow over the next ~week. They had a total of ~$3.9 bln of $GBTC to sell. pic.twitter.com/qXiog228z8

— James Seyffart (@JSeyff) March 25, 2024

One of the biggest deterrents with Grayscale has been its large gas fee which has led to huge outflows. However, addressing this scenario, Grayscale CEO Michael Sonnenshein stated that they would soon work on reducing the fees.

Bloomberg ETF strategist Eric Balchunas suggested that there might never be a significant inflow to GBTC, although he speculated that smaller versions of Bitcoin-based ETFs could see inflows if the fees were reduced to less than 30 basis points.

He pointed out that a considerable portion of GBTC’s assets under management (AUM) might consist of “mirage assets” or “tax hostages,” implying that there might not be many actual individuals left who can freely exit their positions.

Look at that, we agree! I’m w you there may never be an inflow to GBTC ever (maybe the mini me $BTC could see inflows tho if fee <30bps). One thing tho: a lot of GBTC’s aum now is mirage assets and/or tax hostages = prob not a lot of actual ppl left to freely leave. My guess is…

— Eric Balchunas (@EricBalchunas) March 25, 2024

Altcoins Record Inflows

Bitcoin dominated the outflows, accounting for 96% of the total, with US$904 million leaving the asset. Additionally, short-bitcoin experienced minor outflows totaling US$3.7 million. Ethereum, Solana, and Cardano also faced outflows of US$34 million, US$5.6 million, and US$3.7 million, respectively.

However, the rest of the altcoin space saw a positive trend, with net inflows totaling US$16 million. Particularly notable were Polkadot with US$5 million, Avalanche with US$2.9 million, and Litecoin with US$2 million in inflows, reports CoinShares.

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Bhushan Akolkar

Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets.   He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.

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