Spot Bitcoin ETFs record their first week in the negative, why?

Spot Bitcoin ETFs continue to generate volume, and yet they have just had their worst week since their launch. Thus, over 5 consecutive days, the total flows recorded on the various spot BTC ETFs are negative. What could have led to this?

First red week for spot Bitcoin ETFs

The fall in the price of Bitcoin will not have been without consequences for spot ETFs, launched at the beginning of the year on the American stock market. Indeed, while BTC shows a drop of 11% compared to its highest price reached on March 14, spot Bitcoin ETFs record net outflows valued at $888 million over the week.

This observation is explained by the combination of reduced inflows on the 9 new spot Bitcoin ETFs and by the massive outflows of GBTC, the ETF of the giant Grayscale. Previously, GBTC was a BTC trust worth over $28 billion, and this was converted to an ETF in early January 2024.

๐Ÿ‘‰ To understand everything โ€“ What is a Bitcoin ETF?

Consequently, GBTC launched with over $28 billion worth of Bitcoin in Grayscale's coffers, while its adversaries balance their Bitcoin portfolios in proportion to daily investor demands. The GBTC offering the most expensive fees in this section of the market, many people sold their GBTC shares to move to other ETFs more economical, or simply to take their profits.

Indeed, GBTC has long been offered at a discount compared to the price of BTC to which it is backed. In doing so, investors who took advantage of the discount were able to sell their BTC with substantial gains once the trust was transformed into an ETF, since GBTC was rebalanced at that time.

Buy cryptos on eToro
Investing in cryptocurrencies is offered by eToro (Europe) Ltd as a PSAN registered with the AMF. Investing in cryptoassets is very volatile. There is no consumer protection. Investing is risky (learn more)

At any rate, This week marks the first where spot Bitcoin ETFs have recorded 5 days of consecutive net outflows.

Net ETF Flows

Net flows of spot Bitcoin ETFs from launch to today

However, trading volumes have not weakened significantly over the same period, according to available data. Grayscale's GBTC, BlackRock's IBIT and Fidelity's FBTC still appear to be leaders among the 10 existing ETFs.

The IBIT, the ETF of the giant BlackRock, recorded its lowest day of inflow since its launch on Friday, with only $18.9 million in net positive flows. The 3rd largest spot Bitcoin ETF, Fidelity's FBTC, also recorded its worst day since its launch, with $2.85 million in inflows on Thursday.

In other words, the 9 new Bitcoin ETFs show low, but still positive, net inflows. However, Grayscale's GBTC outflows are such that total spot BTC ETF flows are negative. According to Eric Balchunas, ETF analyst at Bloomberg, these exits are largely explained by the operations of Genesiswhich would sell its GBTC shares significantly in order to buy Bitcoin on the spot market.

๐Ÿ‘‰ In ETF news โ€“ Ethereum (ETH): SEC delays decision for Grayscale ETF

However, as Arkham Intelligence pointed out in a post on

BTC Grayscale

Evolution of the number of Bitcoins held by Grayscale

With a view to recovering market share, Grayscale recently announced the upcoming launch of a mini spot Bitcoin ETF with reduced fees, which would also be initiated with the Bitcoins currently held for the GBTC.

In a note shared last Thursday, JPMorgan analysts indicated that Bitcoin โ€œ still looks overbought despite last week's correction ยป. The latter remain optimistic about a clear increase in the price of Bitcoin by the end of the year, but they specified that the decline should be expected to continue before the halving, now expected in less than 'a month.

Buy Bitcoin ETNs and cryptocurrencies with XTB

Sources: Coinglass, So So Value

Newsletter ๐Ÿž

Receive a summary of crypto news every Monday by email ๐Ÿ‘Œ

What you need to know about affiliate links. This page may feature investment-related assets, products or services. Some links in this article may be affiliated. This means that if you buy a product or register on a site from this article, our partner pays us a commission. This allows us to continue to offer you original and useful content. There is no harm to you and you can even get a bonus using our links.

Investments in cryptocurrencies are risky. Cryptoast is not responsible for the quality of the products or services presented on this page and cannot be held responsible, directly or indirectly, for any damage or loss caused following the use of a good or service highlighted in this article. Investments related to cryptoassets are risky by nature, readers should do their own research before taking any action and only invest within the limits of their financial capabilities. This article does not constitute investment advice.

AMF recommendations. There is no guaranteed high return, a product with high return potential involves high risk. This risk-taking must be in line with your project, your investment horizon and your capacity to lose part of this savings. Do not invest if you are not prepared to lose all or part of your capital.

To go further, read our Financial Situation, Media Transparency and Legal Notices pages.

Related Posts

$9.5 billion options expire this Friday

8:29 a.m. โ–ช 3 min reading โ–ช by Fenelon L. This Friday, crypto derivatives exchange Deribit is preparing to experience one of the largest Bitcoin options expirations…

Towards a bitcoin supply crisis?

2:00 p.m. โ–ช 4 min reading โ–ช by Luc Jose A. While the wind of the resumption of its upward momentum is still making people happy, there…

A drop below $50,000 before the Bull Run?

Wed 27 Mar 2024 โ–ช 3 min reading โ–ช by Eddy S. Bitcoin, the cornerstone of the cryptocurrency market, is facing unprecedented turmoil in 2024. CryptoQuant CEO's…

the halving is less than a month away, what will change?

It is the most attended event in the crypto ecosystem. The Bitcoin (BTC) halving is fast approaching, and it is generating its share of hope and transformations….

woman arrested in possession of 2 billion pounds (GBP) of cryptocurrencies

It is the largest cryptocurrency seizure in UK history. A woman has just been found guilty of setting up a vast money laundering enterprise, which used several…

ETNs are coming soon to the London Stock Exchange

The London Stock Exchange (LSE) announced on Monday the upcoming arrival of Exchange Traded Notes (ETN) Bitcoin (BTC) and Ethereum (ETH) on its Exchange. What are the…

Leave a Reply

Your email address will not be published. Required fields are marked *