After experiencing several weeks of significant net inflows, the hype surrounding Bitcoin spot ETFs seems to have subsided. Last week, there was a net outflow of 1,766 bitcoins. However, Bloomberg ETF analyst James Seyffart stated that any type of ETF will go through a period of lack of fund inflows, which is not uncommon.
According to data from Lookonchain, after reducing their holdings by 381 bitcoins earlier this week, 9 Bitcoin spot ETFs further reduced their holdings by 1,299 bitcoins on the 16th, resulting in a net outflow of approximately $81.44 million. Among them, Grayscale had the largest reduction of 2,524 bitcoins, with a net outflow of about $158.21 million. Currently, Grayscale holds 311,621 bitcoins, worth about $19.53 billion.
It is worth noting that the initial frenzy surrounding Bitcoin spot ETFs seems to have diminished. According to Coindesk’s report, the recent inflows of other ETFs have failed to keep up with the rapid outflows from Grayscale’s GBTC. In the week ending last Friday, a total of 1,766 bitcoins were net outflows from Bitcoin spot ETFs.
Upon closer examination, on Friday of last week and Monday of this week, Fidelity’s FBTC had zero fund inflows, breaking the record of daily inflows since its launch on January 11. This makes BlackRock’s IBIT the only product in Bitcoin spot ETFs that still sees daily fund inflows.
For most other Bitcoin spot ETFs, such as Invesco and Galaxy Digital’s BTCO, VanEck’s HODL, and Valkyrie’s BRRR, zero inflows or occasional outflows have become the norm.
In response to this, Bloomberg ETF analyst James Seyffart believes that this is not surprising. For example, there are 3,500 ETFs in the US market, but about 83% of ETFs did not experience fund inflows on Monday of this week.
James Seyffart explained that the creation and redemption of ETF shares only occur when there is a significant mismatch between supply and demand, and when the cost of doing so is lower than hedging. For Bitcoin ETFs, the creation unit ranges from 5,000 to 50,000 shares. If the mismatch is smaller, market makers will handle ETF share transactions like stocks.
James Seyffart also does not believe that Grayscale’s GBTC net outflows will reverse. The reason is that GBTC has a management fee of 1.5% (higher than its competitors). He will be surprised if GBTC experiences net inflows one day.
Although the inflows of Bitcoin spot ETFs have slowed down recently, Samir Kerbage, the Chief Investment Officer of Hashdex, who converted Bitcoin futures funds into Bitcoin spot ETFs in March, believes that inflows will reappear for Bitcoin spot ETFs.
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