The total net inflows into the newly approved spot bitcoin exchange-traded funds (ETFs) have reached nearly $1 billion after three days of trading, according to data from CoinDesk

As of the close of business on Tuesday, January 17, 2024, the total net inflows stood at 21,000 bitcoin (BTC), or $894 million at the current price of $42,600.

Leading the Way: BlackRock's iShares Bitcoin Trust (IBIT) and Fidelity's Wise Origin Bitcoin Fund (FBTC)

BlackRock's iShares Bitcoin Trust (IBIT) emerged as the leading contributor, adding 16,362 bitcoin to its assets under management. This represents a significant portion of the total net inflows, underscoring the growing popularity of IBIT among institutional investors. Closely following IBIT was Fidelity's Wise Origin Bitcoin Fund (FBTC), which added 12,112 bitcoin to its assets.

Sizable Exits from Grayscale's Bitcoin Trust (GBTC): A Sign of Market Volatility?

Grayscale's Bitcoin Trust (GBTC), which had existed as a closed-end fund prior to the approval of spot ETFs, saw sizable exits, leading to a decline in its assets under management.

This exit suggests that some investors may be taking profits in light of market volatility, which could impact the overall industry inflow.

Implications of the Conversion from Closed-End Fund to ETF

Interestingly, until the U.S. Securities and Exchange Commission (SEC) blessed bitcoin ETFs last week, GBTC had existed as a closed-end fund. Its conversion to an ETF meant that the fund no longer traded at a discount to net asset value (NAV). This development has given GBTC holders reason to sell, leading to the exit mentioned earlier.

Why GBTC Holders Are Selling: A Combination of Factors

The conversion of GBTC from a closed-end fund to an ETF has led to a combination of factors contributing to the exits.

• Firstly, the reduced management fee of 1.5% for the ETF version of GBTC is a significant draw for investors.

• Secondly, the lack of a discount to NAV means that GBTC holders can no longer benefit from the arbitrage opportunity that existed in the closed-end fund structure.

• Finally, the overall growth of the bitcoin market and the approval of spot ETFs has led to increased investor interest in alternative ETF products, further contributing to the outflows from GBTC.

The approval of spot bitcoin ETFs has led to a significant influx of capital into the cryptocurrency market, with total net inflows reaching nearly $1 billion after three days.

As the market continues to grow and mature, it will be interesting to see how these developments impact the relative performance of different ETF products and the overall market dynamic.


References:

Alpher, S. (2024, January 17). Bitcoin ETF Net Inflows Near $1B After Three Days. Retrieved from https://www.coindesk.com/markets/2024/01/17/bitcoin-etf-net-inflows-near-1b-after-three-days/

elegant_solution. (n.d.). Retrieved January 13, 2024, from https://www.freepik.com/author/user28432665

Freepik - Goodstudiominsk. (n.d.). Retrieved January 5, 2024, from https://www.freepik.com/author/goodstudiominsk

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