New York, NY – The Bitcoin market experienced a significant selloff on Tuesday, with Grayscale’s Bitcoin Trust recording record outflows. This resulted in accelerated losses for the fund since its conversion into an exchange-traded fund earlier this year. BitMEX Research reported that Grayscale’s ETF saw a daily outflow of $642.5 million on Monday, coinciding with a 4% drop in Bitcoin’s value. By mid-afternoon Tuesday, the cryptocurrency had fallen an additional 2%, although it managed to bounce back from the session lows.
Investors have been divesting their holdings in Grayscale’s fund since its conversion into an ETF on January 10. In contrast, funds have been flowing into the nine new spot Bitcoin ETFs approved by the U.S. Securities and Exchange Commission on the same date. The outflows on Monday pushed the total amount to approximately $12 billion since January 10, despite Bitcoin’s price seeing a 52% increase, which helped offset some of the losses. The fund’s assets currently stand at $27.2 billion, down from $29 billion on the first day of trading for the new ETFs.
Grayscale acknowledged the expected outflows, with CEO Michael Sonnenshein noting that shareholders would likely seek to harvest gains, engage in arbitrage, and liquidate shares to repay creditors. This anticipated activity would naturally lead to outflows from the fund. Sonnenshein revealed plans to gradually reduce fees on the fund, which currently charges a 1.5% fee – considerably higher than fees levied by other ETF providers, which can range from 0.25% to zero with temporary waivers.
While most other Bitcoin funds experienced muted inflows or minimal asset changes, the lack of substantial buying coupled with the significant outflows from Grayscale made Monday the slowest single day for Bitcoin ETF flows since late January. Todd Rosenbluth from VettaFi emphasized that it’s understandable for investors to take profits after a strong market run, highlighting the natural ebb and flow of investment activities in this sector.