June 16, 2024

Mikayla Macfarlane

Serving technology better

GBTC Bitcoin ETF holdings drop before halving

2 min read
A captivating visual representation of the total Bitcoin holdings of spot Bitcoin ETFs, illustrated as floating Bitcoin icons. The icons are arranged in a circular pattern, resembling a digital constellation. The background is a blend of dark space and digital code, giving it a futuristic and tech-savvy vibe. Each Bitcoin icon has a pulsating glow, symbolizing the continuous growth and evolution of the cryptocurrency market.

The Grayscale Bitcoin Trust (GBTC), a prominent Bitcoin investment product, has seen a significant decline in its Bitcoin (BTC) holdings. This is despite the outflows recently slowing down.

According to the data shared by K33Research senior analist Vetle Lunde, the GBTC’s spot Bitcoin ETF holdings have dropped by 50%, from 619,220 BTC on the first day of trading on January 11 to 309,871 BTC on April 16.

The substantial reduction in GBTC’s Bitcoin holdings occurred just two days before the highly anticipated Bitcoin halving event, which is scheduled to take place on April 18. The halving event will reduce the Bitcoin mining reward by 50%, from 6.25 BTC to 3.125 BTC.

A curious coincidence

The GBTC’s drop in Bitcoin holdings is not directly correlated with the upcoming halving event, but the timing of the two events is noteworthy. Historically, Bitcoin halvings have been followed by market rallies, though the relationship is not guaranteed.

The outflows from GBTC have been largely attributed to the fund’s high trading fees, which were the highest among the 10 spot Bitcoin ETFs in the United States at the time of launch, at 1.5%. In contrast, many other Bitcoin ETFs have lowered their fees to remain competitive, with trading commissions ranging from 0.2% to 0.4%.

GBTC’s biggest rival, BlackRock’s iShares Bitcoin Trust (IBIT), offered a lower fee of 0.25% at the trading start, not including a 0.12% discount for the first $5 billion of traded assets during the waiver period. As a result, IBIT has attracted significant inflows, with its Bitcoin holdings surging more than 10,000% from just 2,621 BTC on the trading debut to 272,548 BTC on April 16.

While IBIT’s growth has been impressive, it has not been able to fully absorb the outflows from GBTC, which have totaled 309,349 BTC. However, the overall spot Bitcoin ETF market has seen a collective accumulation of around 224,552 BTC, excluding GBTC, since the trading launch.

As of April 16, 2024, the 10 spot Bitcoin ETFs collectively held around 862,162 BTC, worth $54.7 billion.

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