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Bitcoin ETFs experienced their initial day of net negative outflows for February on Wednesday, potentially indicating that the excitement surrounding these investment products is beginning to wane.
Data gathered from BitMEX Research reveals that the Grayscale Bitcoin Trust (GBTC) faced outflows amounting to $199.3 million on Wednesday, representing its highest daily outflow since January 30. This figure surpassed the inflows to all other Bitcoin ETFs combined, many of which recorded no flows for the day.
Grayscale Bitcoin ETF Returns To Selling
In contrast, BlackRock’s fund recorded inflows of $96.5 million, while Fidelity saw $52.5 million in flows. Overall, all ETFs collectively experienced a net outflow of $35 million.
The previous day of net outflows for the ETFs occurred on January 25, during a period when the crypto market was still in a “sell the news” phase following the ETFs’ launch just two weeks earlier. At that time, BTC was trading around $39,900, but it has since surged to $52,000 amid a significant influx of ETF investments over the subsequent month.
Grayscale has faced continuous outflows since its conversion to an ETF, with numerous early investors liquidating their positions due to a prior arbitrage opportunity between the value of its shares and the underlying BTC. Additionally, those reinvesting in BTC have little motivation to repurchase GBTC now that BlackRock’s ETF is available, which offers a considerably lower management fee and trades with competitive volume.
This marks the first outflow day for the group since January 25th.
If you wish to view this chart on the terminal, it can be accessed by anyone at {G #BI 124590<GO>}. pic.twitter.com/2wAhmL63f0
— James Seyffart (@JSeyff) February 22, 2024
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Moreover, bankrupt crypto lender Genesis – which is under the same parent company as Grayscale, Digital Currency Group (DCG) – received approval earlier this month to liquidate over $1.3 billion of its GBTC holdings.
“The court approved the sale, and then GBTC outflows increased after weeks of declines,” tweeted Thomas Fahrer, co-founder of ApolloSats. “While it’s not certain, I would suggest there is a very high likelihood they’ve already begun selling.”
Since their inception, Bitcoin ETFs have attracted $5 billion in net flows, equivalent to 104,799 BTC.
On Thursday, the European Central Bank released a blog post dismissing Bitcoin despite the ETFs, describing the asset’s rise following their approvals as a dead cat bounce.
“Bitcoin has not fulfilled its promise to serve as a global decentralized digital currency and is still rarely utilized for legitimate transactions,” the central bank stated. “The recent approval of an ETF does not alter the reality that Bitcoin is unsuitable as a payment method or as an investment.”
The post Bitcoin ETFs Return To Outflows Amid GBTC Sale Revival appeared first on Cryptonews.
