Bitcoin ETF fever appears to be waning as the amount of BTC being scooped up by funds and institutional investors slows down.
Moreover, the world’s largest crypto asset manager, Grayscale, saw a record outflow of $643 million on March 18. It beats the previous daily outflow record from GBTC of $640 million on Jan. 22.
The new record equates to around 9,600 BTC, according to BitMEX research.
NINE THOUSAND SIX HUNDRED BITCOIN WITHDRAWN FROM GBTC TODAY@cmsholdings https://t.co/NPv51G8wnt
— BitMEX Research (@BitMEXResearch) March 18, 2024
Grayscale Still Bleeding BTC
Grayscale’s Bitcoin holdings have declined almost 40% since its fund was converted to a spot ETF in mid-January. The firm has seen a whopping outflow of around 241,830 BTC over the past ten weeks.
Grayscale held around 620,000 BTC at the beginning of this year, which has now dwindled to 378,169 BTC, according to the company website.
Investors are pulling out of the company because they can finally convert their shares into BTC directly. This was not previously an option under the old GBTC structure. Additionally, Grayscale has higher fees than rival ETPs, causing investors to rebalance their portfolios.
In response to this, the company filed an application to launch a “Grayscale Bitcoin Mini Trust” under the ticker BTC that would be more competitive.
In addition to Grayscale’s record outflow, it has also been the lowest inflow for Fidelity’s FBTC fund, which saw just a $5.9 million inflow on March 18. BlackRock’s IBIT inflows have also been in steady decline over the past four trading days.
As a result, total net inflows have slowed, dropping below $200 million for the past couple of days. This follows a record inflow of more than $1 billion on March 12.
Low Portfolio Allocations
On March 18, Carson Group vice president and investment strategist Grant Engelbart told Bloomberg TV that just a “handful of advisors” are allocating 3.5% of Bitcoin ETFs on average to client household portfolios.
ETF analyst Eric Balchunas commented that this matches his findings that “so far it’s only ones into BTC already, they are “handful” of early adopters inquiring, then making allocations.”
“Advisors are not yet soliciting the rest of their clients,” he said before adding, “All these flows are from inbound traffic.”
Only a “handful” of advisors have allocated to bitcoin ETFs but the avg allocation was 3.5%, according to Carson Gp, one of the earliest advisor platforms to onboard the ETFs via ETF IQ https://t.co/VIAVw9BAGc
— Eric Balchunas (@EricBalchunas) March 18, 2024
Meanwhile, Bitcoin prices continued to decline, dropping 5% on the day to trade at $65,100 at the time of writing. BTC has now corrected 12% from its all-time high five days ago.