Bitcoin exchange-traded funds (ETFs) have had a major impact on the cryptocurrency market since their debut in January. Even marker observers are impressed by the record performance of these instruments.
However, one prominent product, Grayscale Bitcoin Trust (GBTC), continues to experience outflows, raising concerns about its future trajectory.
Grayscale’s GBTC Bitcoin reserves depleted
Blockchain analysis firm Arcam Intelligence predicted that if current redemption rates continue, GBTC could run out of Bitcoin reserves within the next 96 days.
Since converting to a Spot Bitcoin ETF in January, Grayscale’s Bitcoin balance has plummeted by 266,470 BTC. This represents a significant decrease from the approximately 620,000 BTC originally held.
This downward trend can be attributed to consistent outflows from GBTC, averaging 25,900 BTC per week.
“Grayscale started the year holding 618,280 BTC in the Bitcoin Trust GBTC. They currently hold only 356,440 BTC. At this rate, there are only 14 weeks left until it is permanently depleted.” Arkham Intelligence Analyst Speaks said.
Read more: How to trade Bitcoin ETFs: A step-by-step approach
Grayscale CEO Michael Sonnenschein acknowledged the expected outflow, saying it was primarily due to profit-taking investors and arbitrageurs exiting the fund. Meanwhile, market participants point out that GBTC’s outflow of funds is due to its high fee structure. At the same time, Eric Balchunas, senior ETF analyst at Bloomberg, noted that last week’s outflows were primarily from defunct crypto lender Genesis.
Grayscale is considering various initiatives to counter this trend. This includes the introduction of a cost-effective mini-fund to replace GBTC. Sonnenschein also mentioned the company’s plans to lower fees by 1.5%, in stark contrast to competitors’ fees, which range from 0.2% to 0.5%.
“We’ve seen this in countless other exposures and in countless other markets, and typically when a product is early in its lifecycle and newly introduced, this value is higher. And as those markets mature and the funds grow, fees tend to go down, and we expect the same to be true for GBTC.” Said.
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