About $1.1 billion is estimated to have flowed out of Grayscale's Bitcoin (BTC) spot exchange-traded fund in the last three days of trading as investors rushed to exit the fund after its discount narrowed to its lowest level in nearly three years.
Bloomberg ETF analyst James Seyffarth estimates that the outflow amounted to $594 million on the third day of trading on January 16 alone.
Seyffart had seen inflows from other recently launched Bitcoin ETFs, but was unsure whether those inflows exceeded the outflow of Grayscale Bitcoin Trust (GBTC) on January 16th.
“Most others have seen an influx but doubt it will be enough to offset the nearly $600 million from GBTC.”
Today is likely to be a net outflow day for the #bitcoin ETFs. Estimating ~$594 million left $GBTC for a total of $1.173 billion in outflows. Most others saw inflows but doubt its enough to offset nearly $600 mln out of $GBTC https://t.co/elD9qkyjj2
— James Seyffart (@JSeyff) January 17, 2024
Seyffart and other analysts noted that there could be discrepancies in the flow calculations due to the accounting and settlement processes typically associated with stock trading.
For several years, GBTC offered a lucrative trade for investors who borrowed money to enter the fund and then scalped profits from Grayscale's premium, which reached 43% in July 2019, according to YCharts.
GBTC arbitrage trading evaporated when the premium suddenly turned into a discount in February 2021. Due to the minimum six-month lock-up period imposed on investors buying GBTC shares, many investors found themselves trapped in the fund, unwilling to sell their shares at a constant price-worsening discount.
After converting GBTC into a spot ETF, the discount fell to 1.55% and investors whose funds were locked up for an extended period of time are now looking to exit.
The estimated $1.17 billion GBTC outflow equates to approximately 27,000 Bitcoin at its current price of around $42,800.
Excluding GBTC, 35,761 bitcoins are held by nine other spot Bitcoin ETF issuers, according to CC15Capital's X-account data.
In addition to Grayscale's 605,891 Bitcoin, ETFs from BlackRock and Fidelity accounted for 11,439 and 9,750 BTC, respectively, according to CC15Capital.
However, each ETF issuer's Bitcoin holdings may be out of date.
— CC15Capital (@Capital15C) January 17, 2024
Related: Bitcoin Price Shows Strength at $43K Despite Coinbase and GBTC Selloff
Meanwhile, Cathie Wood's ARK Invest began forming her own newly approved ARK 21Shares Bitcoin ETF (ARKB) and sold her shares of the Proshares Bitcoin Strategy ETF (BITO) and other technology-focused stocks in her Internet ETF ARK Next Generation.
ARK begins buying its own bitcoin ETF…
Was simply a matter of time. https://t.co/Z8P4nMGBNO
— Nate Geraci (@NateGeraci) January 17, 2024
ARKB currently holds 2,535 Bitcoin worth over $109 million, which is the 5th largest Bitcoin stack among the 10 spot Bitcoin ETF issuers.