Grayscale Bitcoin Trust Market Share Drops Below 50%

Grayscale Bitcoin Trust (GBTC) Falls Below 50% Market Share Among U.S. Bitcoin ETFs

As of March 12, Grayscale’s spot Bitcoin exchange-traded fund (ETF) has dropped below 50% market share, marking the first time since the inception of spot Bitcoin ETFs in the United States on Jan. 11.

The total assets under management (AUM) in the Grayscale Bitcoin Trust (GBTC) have decreased to $28.5 billion, with Grayscale now representing 48.9% of the total $56.7 billion held across ten U.S. Bitcoin ETFs, according to Dune Analytics data.

Initially, Grayscale’s GBTC fund dominated the total AUM of U.S. spot Bitcoin ETFs, accounting for around 99.5% on the first trading day. However, consistent daily outflows from GBTC, averaging $329 million per day last week, have eroded the ETF’s market share over time.

While GBTC outflows were significant within the first month of Bitcoin ETFs going live, reaching $7 billion, they slowed down in late January. But recent developments, such as the bankruptcy courts allowing crypto lender Genesis to liquidate approximately $1.3 billion worth of GBTC shares, have led to increased outflows once again.

To date, GBTC outflows have surpassed $11 billion, according to Farside Bitcoin ETF flow data.

Grayscale’s ETF, initially a trust for institutional investors to gain exposure to Bitcoin, underwent a transformation into an ETF following a court victory over the Securities and Exchange Commission in August. This allowed institutional investors to opt for Bitcoin ETFs with lower fees or exit the fund altogether after taking advantage of GBTC arbitrage trades.

While the market initially reacted negatively to the outflows from GBTC, the growing net inflows into BlackRock’s iShares Bitcoin ETF (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC) have been a positive sign. These two funds have collectively attracted $16.9 billion worth of inflows since their inception.

The influx of funds into the newly launched ETFs has been identified as a key driver behind the rapid increase in the price of Bitcoin, which recently hit a new all-time high of $72,900 on March 11. BlackRock’s IBIT ETF now holds over 200,000 Bitcoin in AUM, valued at around $14.3 billion.

Overall, the evolving landscape of U.S. Bitcoin ETFs highlights the shifting dynamics of the cryptocurrency market and the role of institutional investors in driving these changes.