Spot Bitcoin ETF: Grayscale Outflows Slows Down, But There’s a Catch

The spot Bitcoin ETF market has taken a new twist concerning the capital net flow as pointed out by Bloomberg Exchange Traded Fund analysts James Seyffart and Eric Balchunas.

Spot Bitcoin ETF Flow Changing Course

According to Blachunas, the Grayscale Bitcoin Trust (GBTC) outflows are trending down. The data presented by Seyffart showed that the Michael Sonneshein-led firm saw a total outflow of $429.3 million. This figure is surprisingly down from the $515.3 million recorded on January 24.

The tapering down of the departure of funds from Grayscale spot Bitcoin ETF product is a positive one for the market after close to two weeks of consistent outflow. The impact of these outflows has been a major slump in the price of Bitcoin as investors in the general market considered the fund redistribution as a selloff signal.

The dampened sentiment the trend caused has sparked the selloff in Bitcoin whose price is battling to keep support at the $40,000 mark.

While the outflow in Grayscale has slowed as Balchunas pointed out, he also noted that there has been a slowdown in the total amount of funds flowing into the other spot Bitcoin ETF products from issuers like BlackRock and Fidelity Investments.

Per the data presented by James Seyffart, BlackRock has seen a Day-9 inflow of $66.2 million while Fidelity Investments has seen an inflow of $125 million, a value that surprisingly surpasses that of BlackRock. Comparing this data to Yesterday’s which saw BlackRock welcome $160.1 million in inflows and Fidelity around $157.7 million respectively.

Notably, this shift in trend confirmed the thesis that outflow from Grayscale Investments’s GBTC is what the majority of the competing asset management firms are benefiting from. At the moment, total net flow for Day 9 is pegged at more than $824 million.

The good news: GBTC outflows trending down. The bad news: so are the Nine's. That leaves us with TOTAL ROLLING NET FLOWS of +$824m. Also $ARKB and $BITB crossing half a billion is remarkable. For any normal launch in first month that's considered blockbuster-level success. https://t.co/jPtlxhMtwP

— Eric Balchunas (@EricBalchunas) January 25, 2024

Precedent Playing Out for Spot Ethereum ETF

There are many aspects of the current spot Bitcoin ETF administration in the market that are setting a precedence for the proposed spot Ethereum ETF. First, the numerous applications for the spot Ethereum product are currently being deliberated on by the market regulator with those of BlackRock, Fidelity Investments and Grayscale having already been delayed.

Grayscale Investments also has a robust Ethereum Trust that might play a pivotal role if its spot ETH ETF finally gets approved. There is a likelihood there might be an imbalance in outflow when the product enters the market to model the current trend seen in the spot Bitcoin ETF ecosystem.