Bitcoin
Grayscale Bitcoin ETF Records First Entry After Losses
Grayscale’s Bitcoin Trust (GBTC), the largest Bitcoin (Bitcoin) asset exchange-traded fund (ETF), reported its first net inflow since its launch in January 2024.
This comes after the bottom with experience $1.6 billion in outflows before Bitcoin halving.
On May 3, GBTC recorded a net inflow of $63 million, according to data from Farside Investors. This marked the first positive net flow into the fund since its conversion to an ETF in January, when 11 new spot Bitcoin ETFs were launched in the US.
Several factors contributed to consistent outflows from GBTC since its conversion into an ETF. One of the main reasons is the fund’s annual management fee of 1.5%, which is substantially higher than other Bitcoin ETFs that charge less than 1%.
Additionally, the sale of GBTC shares by failed crypto firms such as FTX and Genesis also fueled outflows. FTX sold about $1 billion worth of GBTC shares, and Genesis liquidated approximately 36 million shares, valued at $2.1 billion, to buy Bitcoin.
On the same day, May 3, the market as a whole recorded a net inflow totaling US$378 million. Notable performers included Franklin Templeton’s Bitcoin ETF (EZBC), which recorded its largest inflow ever of $60.9 million, and Fidelity’s Bitcoin ETF (FBTC), which led the day with US$ 102.6 million in inflows.
The inflow halted Grayscale’s streak of net withdrawals from Bitcoin Trust (GBTC). Currently, GBTC has $18.1 billion in assets, while IBIT has reached $16.9 billion. IBIT started with zero assets in January, while GBTC had more than $26 billion. While the entry is a positive sign for GBTC, the rapid growth of IBIT is adding competitive pressure.
This shift from outflows to inflows in GBTC and the broader Bitcoin ETF market has brought a sense of optimism among investors, with some suggesting this could be an early indicator that Bitcoin is reaching new all-time highs. However, it remains to be seen whether this dynamic will continue, given ongoing regulatory and market uncertainties.
Ethereum ETF: Grayscale remains hopeful
Grayscale says it is trusting that the US Securities and Exchange Commission (SEC) will approve your Ethereum spot (ETH) exchange-traded funds (ETFs) through May, despite recent concerns about the SEC’s level of involvement with candidates and its ongoing investigation into the Ethereum Foundation.
Craig Salm, chief legal officer at Grayscale, noted the similarities between the approval processes for spot Bitcoin ETFs and spot Ethereum ETFs, emphasizing that the core operations are fundamentally the same, with the main difference being the underlying asset – Bitcoin versus Ethereum.
This consistency, according to Salm, should make the SEC’s review process simpler, contributing to Grayscale’s optimism for a positive outcome.
Grayscale’s perspective contrasts with that of Bloomberg ETF analysts Eric Balchunas and James Seyffart. Both observers lowered their May Ethereum ETF approval expectations to just 25%.
Balchunas suggested that the SEC’s apparent lack of involvement could be deliberate and not just a delay.
Cryptocurrency exchange Coinbase also encouraged the SEC to approve Grayscale’s proposed spot Ethereum ETF. In a letter to the SEC, Coinbase argued that the logic used to justify approving spot Bitcoin ETFs applies equally, if not more strongly, to the case of spot Ethereum ETFs.
The SEC is expected to make a decision on VanEck’s application by May 23, with the fate of other candidates being announced around the same time. Companies like Black stoneVanEck, Fidelity, and Grayscale are actively seeking approval for their spot Ethereum ETFs.
Grayscale’s confidence in the SEC’s approval of spot Ethereum ETFs is based on the parallels between the processes for spot Bitcoin ETFs and spot Ethereum ETFs.
The firm believes that the key issues addressed by the SEC during the spot Bitcoin ETF approval process are largely the same as those for spot Ethereum ETFs, suggesting that the regulator’s experience with Bitcoin could pave the way for Ethereum.