Grayscale bitcoin ETF outflows hit $1.9 billion last week

While there has been buying interest in new funds from BlackRock, Fidelity Investments and others since the U.S. SEC approved the new crypto currency ETFs in January, it was not enough to offset selling by Grayscale holders last week, shows the data

Grayscale Bitcoin Trust recorded $1.9 billion in outflows last week, tipping the group of U.S. spot bitcoin ETFs into net outflows for the week ending March 22, shows data from BitMEX Research.

While there has been buying interest in new funds from BlackRock, Fidelity Investments and others since the U.S. SEC approved the new crypto currency ETFs in January, it was not enough to offset selling by Grayscale holders last week, shows the data.

Inflows to the other nine exchange-traded funds launched at the same time as Grayscale's fund converted also slowed last week as the price of bitcoin was muted compared with highs it notched earlier this month.

Grayscale's outflows have been due to fees significantly higher than those of its rivals, as well as selling by bankruptcy trustees, analysts said.

According to Bryan Armour, an ETF analyst at Morningstar, Grayscale opted to keep the management fee on its converted ETF at 1.5%, compared with 0.25% for the BlackRock fund and even lower, including fee waivers, at rivals.

A Grayscale spokesperson said that its team anticipated that strategies such as profit-taking and arbitrage as well as selling by bankruptcy trustees to satisfy creditors of FTX and others would lead to net outflows.

In contrast to Grayscale's outflows, assets at BlackRock's iShares Bitcoin Trust have witnessed the most dramatic gains, hitting the $10 billion mark on March 1, per data from Morningstar and TrackInsight. Last week, its inflows totalled $828.3 million, down from $2.48 billion for the week ended March 15, shows data from BitMEX Research.

Grayscale has seen other challenges. Last week, Wealthfront said it would replace Grayscale's ETF with the iShares fund as an alternative, citing its low fee and high average daily trading volumes.

After surging 16% earlier this year, bitcoin remains about 9% below its peak, recorded only two weeks ago. Gains on the ETFs mirror that price action.