Grayscale and Other Crypto Fund Managers Experience Outflows
In the past week, several major Bitcoin funds have witnessed significant outflows, potentially contributing to the recent dip in BTC and other digital asset prices. CoinShares, a European digital asset manager, has reported a slowdown in outflows from the largest fund, Grayscale. The trend of investors redeeming their Grayscale holdings intensified after the fund transitioned into an exchange-traded fund (ETF) earlier this month. This resulted in a notable decline in Bitcoin prices as the fund moved its cryptocurrency to Coinbase, its custodian.
According to CoinShares, Grayscale recorded outflows of $2.2 billion last week. However, data suggests that the outflows are gradually subsiding as the daily total decreased throughout the week. Major crypto fund managers like Bitwise, Fidelity, Grayscale, ProShares, and 21Shares saw investors withdrawing over $500 million within the same period.
Newly Minted Bitcoin ETFs Attract Inflows Despite Outflows from Big Funds
Despite the outflows from the abovementioned funds, newly launched Bitcoin ETFs in the United States experienced significant inflows. The CoinShares report highlights that U.S. ETFs witnessed inflows totaling $1.8 billion in the past week. Since their launch on January 11, 2024, these ETFs have attracted inflows amounting to $5.94 billion.
The approval and subsequent trading of 10 BTC ETFs on Wall Street marked a historic milestone for the industry. The availability of these investment vehicles has enticed investors due to pent-up demand. Regulators in the United States had previously prohibited the creation of spot Bitcoin ETFs for a decade.
However, despite the growing interest in Bitcoin investment products, the price of BTC has not witnessed significant fluctuations. Although it initially surged on the news of the ETF approvals, the price dipped as investors cashed out of Grayscale. Prior to Grayscale’s ETF conversion, investors were required to hold their shares for at least six months before selling them. The lock-up policy served as a contentious issue, resulting in a lawsuit dropped by bankrupt crypto exchange FTX, which sought to strengthen its cash reserves.
As of now, BTC is trading at $41,872 per coin, recovering slightly with a 2% increase over the week, according to CoinGecko. However, over the past 30 days, its value has remained relatively stable.