Grayscale’s GBTC Records $1.1 Billion Exodus Following Discount Drop

Grayscale’s spot Bitcoin ETF has witnessed a substantial outflow of approximately $1.1 billion within the last three days. This massive outflow from the fund followed a reduction in its discount to the lowest level in nearly three years.

Bloomberg’s ETF analyst, James Seyffart, reported via a post on X (formerly Twitter) on January 16 that around $594 million left the platform on its third trading day. While Seyffart noted inflows into other recently launched spot Bitcoin ETFs, it remains uncertain whether these impacted the outflows from the Grayscale Bitcoin Trust (GBTC).

ETF analysts, including Seyffart, acknowledged that there might be potential errors in calculating these figures, especially with settlement processes typically associated with trading shares.

Grayscale has been a prominent global asset manager, providing a profitable trade for investors who leveraged money to enter the fund and then engaged in short-term trading based on the Grayscale Premium, which peaked at 43.1% in July 2019, according to YCharts data.

According to the chart data, the GBTC arbitrage disappeared when its premium turned into a discount in February 2021. Grayscale imposed a minimum six-month lock-up tenure to ensure investors were unwilling to sell out their increasingly declining discounts. However, after GBTC transitioned to a spot Bitcoin ETF, its discount dropped to as low as 1.55%. This prompted investors who locked up their funds for prolonged periods to exit their stakes in the fund.

GBTC’s outflow of over $1.17 billion equates to 27,000 bitcoins at its current price of $42,800. According to CC15Capital, only nine other spots Bitcoin ETF providers, aside from Grayscale, hold up to 35,761 bitcoins.

Grayscale maintains the largest Bitcoin holdings, totalling 605,891 bitcoins, followed by BlackRock and Fidelity Investments, with 11,439 and 9,750 bitcoins, respectively.

In another development, Cathie Wood’s ARK21 Invest has started accruing its shares of the Proshares Bitcoin Strategy ETF (BITO) and additional tech-related shares in its ARK Next Generation Internet ETF, as reported by Nate Geraci on X.

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