Grayscale GBTC outflows find a counterpart in net inflows to the remaining spot Bitcoin ETF funds. Here’s why it’s important.
The spot Bitcoin (BTC) exchange-traded fund (ETF) instrument debuted on Jan. 12. The first trading session was somewhat chaotic as investors had no clue as to what the actual inflow was, and the market makers themselves faced issues with the different liquidation timelines for each instrument. Still, the $4.66 billion volume on Bitcoin spot-based ETFs set a record high in the traditional finance industry, but is this enough to justify a Bitcoin price rally above $47,000?
Some criticism emerged regarding the Grayscale GBTC, which previously existed as a Trust fund and held over $27 billion worth of BTC under management. In the first three trading days alone, this instrument experienced $1.17 billion of net outflows. Most of that movement happened on Jan. 13 and Jan. 16, balancing out 86% of the inflows to other spot Bitcoin ETFs in the period. In absolute terms, this translates to a mere aggregate $157 million net inflow in 2 days.
Most of the $782 million net inflow highlighted in the data originally presented by senior Bloomberg ETF analyst Eric Balchunas occurred on the first trading session. Due to its different settlement times, arbitrage desks were unable to exit their GBTC positions on Jan. 12. For instance, a short (negative) position on CME Bitcoin futures could have been used to offset the GBTC long (positive) to benefit from the discount that the fund shares used to trade prior to the spot ETF approval.
