United

Bitcoin ETF

Grayscale Bitcoin Trust

Billion

A recent slump in the price of cryptocurrencies, prompted by outflows from the Grayscale Bitcoin Trust (GBTC), could be behind outflows from digital asset investment products in Europe and Canada, according to CoinShares.&nbsp;
“Recent price declines prompted by the substantial outflows from the incumbent ETF issuer (Grayscale) in the US totalling US$5bn, have likely prompted further outflows [in] other regions,” CoinShares <a href="https://a.storyblok.com/f/155294/x/1dd9ce5803/coinshares-digital-asset-fund-flows-29-01-2024.pdf" target="_blank" rel="noopener noreferrer nofollow">explained</a> in a Jan. 28 report.
Digital asset products from Switzerland and Germany were hit hardest during the trading week of Jan. 22 to Jan. 26, with outflows of $59.8 million and $31.7 million respectively, CoinShares’ data shows.
However, Canadian digital asset products have recorded the largest outflows in January, with $209.8 million, followed by products in Germany and Sweden, with $124.5 million and $34.2 million, respectively.
Digital asset products from Brazil were the only major inflow last week, with $10.3 million.
<figure data-ct-non-breakable="true"><img src="https://s3.cointelegraph.com/uploads/2024-01/952a2a3d-6eca-4b08-8089-c44bf98221db.png" alt="" title="">
 <figcaption style="text-align: center;">Weekly cryptocurrency investment product flows by country. Source: CoinShares
 </figcaption>
</figure>
Meanwhile, the second full week of spot Bitcoin ETF trading in the U.S. contributed to an outflow of nearly $500 million alone, CoinShares noted.
While the nine new spot Bitcoin (<a href="https://cointelegraph.com/bitcoin-price" rel="noopener noreferrer nofollow">BTC</a>) ETFs tallied nearly $1.8 billion in inflows, it wasn’t enough to patch up bleeding from Grayscale’s converted spot Bitcoin ETF, GBTC, which saw over $2.2 billion in outflows over the week.
However, GBTC outflows are beginning to subside as its daily total in outflows continued to reduce during the week, CoinShares noted.
<figure data-ct-non-breakable="true"><img src="https://s3.cointelegraph.com/uploads/2024-01/6a642b4d-2767-48f1-acce-826b6e51df7b.png" alt="" title="">
 <figcaption style="text-align: center;">Weekly cryptocurrency investment product flows (USD/ millions). Source: CoinShares
 </figcaption>
</figure>
For several years, GBTC offered a profitable trade for investors who borrowed money to enter the fund and then scalped profit on the Grayscale premium, which reached as high as 43% in July 2019,<a href="https://ycharts.com/companies/GBTC/discount_or_premium_to_nav" target="_blank" rel="noopener noreferrer nofollow"> according</a> to YCharts data.
The GBTC arbitrage trade vaporized when the premium suddenly became a discount in February 2021. Due to the minimum six-month lock-up period&nbsp;<a href="https://www.grayscale.com/products/grayscale-bitcoin-trust/?gclid=CjwKCAjwq7aGBhADEiwA6uGZp5Bc4HHPGO_Kqsc-pBott-3aQ5ncgM7opx05k40QoT9gB8SpLQPYGxoCdjgQAvD_BwE" target="_blank" rel="noopener noreferrer nofollow">imposed</a> on investors purchasing GBTC shares, many investors became trapped in the fund, unwilling to sell their shares at a continually worsening discount.
Following GBTC’s conversion to a spot Bitcoin ETF, the discount has fallen from 1.55% to 0% on Jan. 26, YChart’s data shows.
Related: <a href="https://cointelegraph.com/news/blackrock-boomer-bitcoin-etf-ad-marketing-war-ramps" rel="noopener noreferrer nofollow">BlackRock drops ‘boomer’ Bitcoin ETF ad as marketing blitz ramps up</a>
While $5 billion has been wiped from GBTC this month, CoinShares noted that the newly issued spot Bitcoin ETFs have tallied $5.94 billion in inflows seen in the Bitcoin products since they&nbsp;<a href="https://cointelegraph.com/news/bitcoin-spot-etf-volumes-break-records-blackrock-fidelity-grayscale" rel="noopener noreferrer nofollow">started trading on Jan. 11</a>.
<blockquote class="twitter-tweet">
 The 9 new spot <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">#Bitcoin</a>&nbsp;&nbsp;ETFs bought ~140,000 <a href="https://twitter.com/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$BTC</a> worth $6 Billion USD in 11 trading days This excludes <a href="https://twitter.com/search?q=%24GBTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$GBTC</a> (conversion w/ outflows)<a href="https://twitter.com/search?q=%24IBIT&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$IBIT</a> <a href="https://twitter.com/search?q=%24FBTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$FBTC</a> <a href="https://twitter.com/search?q=%24ARKB&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$ARKB</a> <a href="https://twitter.com/search?q=%24BITB&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$BITB</a> <a href="https://twitter.com/search?q=%24BRRR&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$BRRR</a> <a href="https://twitter.com/search?q=%24BTCO&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$BTCO</a> <a href="https://twitter.com/search?q=%24HODL&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$HODL</a> <a href="https://twitter.com/search?q=%24EZBC&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$EZBC</a> <a href="https://twitter.com/search?q=%24BTCW&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$BTCW</a> <a href="https://t.co/i0DIJYWUEI" rel="noopener noreferrer nofollow">pic.twitter.com/i0DIJYWUEI</a>— HODL15Capital (@HODL15Capital) <a href="https://twitter.com/HODL15Capital/status/1752010497744912432?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">January 29, 2024</a>
</blockquote>
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$5B flight from GBTC likely led to outflows in other regions — CoinShares

Cointelegraph

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