GBTC Faces $21B Outflows, BlackRock Bitcoin ETF Dominates

Grayscale Bitcoin Trust (GBTC) has seen significant outflows of $21 billion since its launch in January 2024. Meanwhile, the broader spot Bitcoin ETF market has attracted over $35.5 billion in investments within the same period. This divergence highlights investors’ shifting preferences toward newer, more regulated Bitcoin ETF (exchange-traded funds).

GBTC Faces $21 Billion Loss in Outflows as Bitcoin ETFs Strengthen

Over the past 11 months, GBTC has seen daily outflows averaging $89.9 million, leading to $21.045 billion in losses.

While the first U.S. spot Bitcoin ETF to launch, it is the only one that has generated negative investor flows. Other spots, Bitcoin ETFs collectively attracted $20.737 billion in positive investment, apparently changing investor confidence.

Nine bitcoin ETFs are competing with each other and gaining market traction, and they are all alternatives to GBTC.

Thanks to funding from Fidelity, ARK, Invesco, and more, many of these funds have taken advantage of increased demand for Bitcoin exposure. Still, all those combined inflows haven’t quite canceled out GBTC’s massive outflows.

Spot Bitcoin ETF Surge Under BlackRock’s Lead

BlackRock’s iShares Bitcoin Trust (IBIT) has emerged as the dominant player in the Bitcoin ETF market. Since its launch, IBIT has pulled in $35.883 billion, including $153.3 million a day. Less than a year in, this performance has taken total Bitcoin spot ETF market investments above $35.5 billion.

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A shift in regulatory gears came earlier this month when the SEC approved spot Bitcoin ETFs in January 2024 after a court ruled in Grayscale’s favor. This decision was expected to help cement GBTC’s place in the market. However, a sharp pivot in confidence is also evident from investor preference for other funds, notably BlackRock’s IBIT.

Grayscale’s ETHE Faces $3.5 Billion Outflows

Grayscale’s challenges extend beyond Bitcoin, as its Ethereum Trust ETF (ETHE) has also faced steep outflows. ETHE’s $3.5 billion in losses since its launch in July 2024 mirror that of GBTC. Meanwhile, other spot Ether ETFs, including BlackRock’s iShares Ethereum Trust and Fidelity Ethereum Fund, have taken in $3.2 billion and $1.4 billion, respectively.

The emergence of competing Ethereum funds suggests a larger appetite for diversified and well-regulated ETF offerings. Furthermore, Grayscale has been unable to gain investor self-assurance regarding its Ethereum assets, as these cannot keep pace with logical seconds, which are the market’s driving forces.

Grayscale Plans Multi-Crypto ETF Amid Investor Loss

Grayscale is exploring diversification through multi-crypto offerings to earn investors’ trust back. In the meantime, on October 14, Grayscale asked the New York Stock Exchange to convert its Digital Large Cap Fund into an ETF, the most popular Wall Street innovation of the decade. This fund includes many cryptocurrencies, including Bitcoin, Ethereum, Solana, and Ripple.

The company offers GBTC, Bitcoin Mini Trust, Ethereum Trust, and Ethereum Mini Trust. Grayscale plans to meet the increasing demand for diversified crypto investments through a multi-token ETF. However, it will rely on its ability to regain investor faith following the dismally low returns of previous funds.

This shows a significant change in investor behavior, with GBTC’s outflows standing in sharp contrast to the popularity of competing ETFs. BlackRock’s performance highlights the traction for solid, secure, and regulated Bitcoin investment vehicles.