Grayscale’s GBTC outflows reach $7B, but data shows it’s slowing

Crypto asset manager Grayscale has continued to see a slowdown in outflows from its spot Bitcoin ETF — though observers believe there’s still room for further bleeding.

According to data from Bianco Research and Farside, the total outflow of funds from the Grayscale Bitcoin Trust (GBTC) since it converted to a spot Bitcoin (BTC $52,329) ETF reached $7 billion on Feb. 16. However, while the rate of outflow has slowed considerably, observers, including ETF Store President Nate Geraci, say the bleeding may not be over.

While January saw the largest portion of the exodus, with $5.64 billion leaving GBTC by the end of the month, February has only seen $1.37 billion in outflows so far. 

In a Feb. 18 post on X, Bianco Research founder and former Wall Street analyst and commentator Jim Bianco believes that much of the outflow is due to investors rebalancing their portfolios and shifting to spot Bitcoin ETFs with lower fees.

He added that the newly launched batch of ETFs has cut their fees to between 0 and 12 basis points, whereas Grayscale still charges 150 bps.

Bianco offered another reason for the continued outflow from GBTC: the fund traded at a substantial discount to the BTC market price — a roughly 44% discount to Bitcoin — when BlackRock filed for its spot ETF in June 2023.

“A lot of money flows into ‘cheap’ BTC,” he said, adding:

When it [Grayscale] converted to an ETF on January 11, 2024, they began to close this ‘arbitrage-type’ trade as their goals were accomplished.

GBTC asset price and net asset value premium/discount. Source: Bianco Research

Meanwhile, Geraci believes that it’s still early and that the “asset bleed will continue.”

They can have assets chopped by like 90% and still make more than all of the other issuers combined.

He also believes that Grayscale may next launch a “mini-GBTC,” a separate and new spot Bitcoin ETF at a significantly lower fee.

Further bleeding could also come after a judge recently signed off on an order allowing bankrupt crypto lender Genesis to sell off part of its investments in Grayscale.

According to court documents, Genesis held around $1.6 billion worth of shares in GBTC, the Grayscale Ethereum Trust and the Grayscale Ethereum Classic Trust.