- Grayscale’s Bitcoin Trust GBTC saw a record $6.42 billion outflow on Monday as crypto sentiment cooled, while Fidelity’s Bitcoin ETF also saw inflows drop.
- The broader crypto ETF market experienced its first net outflow of funds since March 1st, with trading volume dropping to $42 billion on Monday, down from recent weeks.
- With GBTC outflows totaling over $12 billion this year, Grayscale plans to cut fees to stem further outflows, though volatile market conditions may continue impacting crypto fund flows.
The crypto market has seen its fair share of volatility over the past year. This week, sentiment towards digital currencies like Bitcoin cooled off even further as investors pulled a record amount of money from Grayscale’s Bitcoin Trust ETF.
Grayscale Bitcoin Trust Sees Unprecedented Single-Day Outflow
On Monday, Grayscale’s GBTC, the largest Bitcoin spot ETF, experienced a massive outflow of $6.42 billion, surpassing the previous record outflow of $6.40 billion on January 22nd. Additionally, Fidelity’s Bitcoin ETF saw inflows drop to just $59 million, the lowest since the fund’s inception.
According to data from Farside Investors, the leading digital currency Bitcoin fell up to 7% on Tuesday following this news, with its value dropping to around $62,500 in London morning trading. Other major cryptocurrencies like Ethereum, Solana, and Dogecoin also declined.
Overall Crypto ETF Market Experiences First Net Outflow Since March
The broader crypto ETF market saw its first net outflow of funds since March 1st. Despite $4.51 billion flowing into BlackRock’s dominant IBIT ETF, the massive GBTC outflows led to an overall negative flow of $1.54 billion for the sector.
Trading volume in these ETFs has also dropped off lately. The daily volume decreased to $42 billion on Monday, well below the previous weeks’ range of $55-77 billion and less than half of the record $99 billion traded on March 5th.
BlackRock’s IBIT maintained its leading position with $2 billion in volume yesterday. Grayscale’s GBTC and Fidelity’s FBTC followed with $1 billion and $630 million. The total crypto ETF trading volume now stands at $145.8 billion, with BlackRock controlling 48.7% of the market share.
Grayscale May Cut Fees to Stem Outflows
In light of the heavy GBTC outflows totaling over $12 billion this year, Grayscale CEO Michael Sonnenshein announced plans to reduce fees for the firm’s flagship Bitcoin product.
Grayscale has faced criticism over GBTC’s high management fee of 2%, especially compared to competitors like BlackRock and Fidelity. While defending the current fee structure, Sonnenshein acknowledged fees should decrease as the crypto ETF market matures further.
The fee cuts could help Grayscale stem additional outflows from its Bitcoin Trust. However, the volatile crypto market conditions may continue to impact sentiment and fund flows in the near term.
