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

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.

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.

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.