Grayscale GBTC Notches 4 Inflow Days But ETHE Outflow Concerns Mount

On May 20, Grayscale’s GBTC fund had an inflow of $9.3 million. While this is much lower than rival funds from BlackRock or Fidelity, it is a milestone for Grayscale, which has hemorrhaged capital since it converted the fund to a spot Bitcoin ETF in January.

It is the first time since mid-Janaury that GBTC has seen four inflow days in a row, and it only registered its first reversal of outflows on May 3.

The total GBTC inflow over the past four trading days was $72.5 million, according to Farside Investors.

Bitcoin ETF Flow (US$ million) – 2024-05-20

TOTAL NET FLOW: 237.2
(Provisional data)

IBIT: 66.4
FBTC: 64
BITB: 24
ARKB: 68.3
BTCO: 0
EZBC: 0
BRRR: 0
HODL: 0
BTCW: 5.2
GBTC: 9.3
DEFI: 0

For all the data & disclaimers visit:https://t.co/4ISlrCgZdk

— Farside Investors (@FarsideUK) May 21, 2024

ETHE Outflow Concerns

Nevertheless, GBTC has shed 53% of its assets under management over the past four months totaling a whopping 330,610 BTC worth around $23.5 billion at current prices.

In light of that exodus, observers have envisaged something similar happening to its Ethereum fund should the SEC approve its conversion to a spot ETH ETF on or before the deadline of June 23.

The firm’s ETHE fund, which currently holds around $10 billion worth of ETH in assets under management, is trading at a discount to net asset value of roughly -20%, according to Ycharts. This discount is likely to be wiped out if the SEC grants approval to convert the fund to a spot ETH ETF (as it was when the BTC fund conversion was approved).

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Moreover, a similar exodus from this fund to take profits or rebalance portfolios to rivals with lower fees could see around 1.3 million ETH exiting the fund.

This is one possible scenario: approval of 19b-4 but not S-1.

In my opinion, this is better than having both approved at the same time (and thus ETH ETF to start trading immediately).

This way, we will get approval without the immediate selling pressure of Grayscale’s ETHE ($9b… https://t.co/8XPGNIFKN8

— Huma (@HumaCapital) May 20, 2024

However, Bitcoin prices rallied 70% since the approval of spot ETFs despite the exodus from GBTC.

If a similar thing happens with ETH, the asset could potentially surge to $6,000 over the next few months.

Bitcoin ETF Flows Update

The total inflow for all spot Bitcoin ETFs for May 20 was $237.2 million. Over the past five trading days, more than $1.1 billion has been poured into BTC ETFs.

Ark 21 Shares led the way yesterday with an inflow of $68.3 million. BlackRock and Fidelity were not far behind with $66.4 million and $64 million, respectively.

Bitcoin ETF flows starting to pick back up pic.twitter.com/s5fBWNwUfy

— Will (@WClementeIII) May 20, 2024

The ETF inflow surge comes as crypto market capitalization hit a six-week high of $2.74 trillion on May 21, primarily driven by Ethereum.