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?

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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.

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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.

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Sources: Coinglass, So So Value

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