BlackRock's Bitcoin ETF Surpasses Grayscale in Daily Trading Volumes

In a significant shift, BlackRock's spot Bitcoin ETF has outpaced Grayscale Investments' counterpart in daily trading volumes, marking a notable milestone since the launch of U.S. spot Bitcoin funds on January 11.

Changing Dynamics in Trading Volumes

Grayscale's Bitcoin Trust ETF (GBTC) initially dominated trading volumes during the first three weeks of trading for U.S. spot Bitcoin funds. Over the initial 15 days of trading for the ten ETFs in this segment, GBTC accounted for almost half of the total trading volumes, reaching approximately $14.4 billion out of $29.3 billion, according to Bloomberg Intelligence.

However, recent data reveals a shift in dynamics, with BlackRock's iShares Bitcoin Trust (IBIT) surpassing GBTC in daily trading volumes. On Thursday, GBTC recorded trading volumes of around $292 million, while IBIT experienced higher figures, reaching $302 million.

Challenges Faced by Grayscale

Despite GBTC's substantial trading activity, it has faced net outflows amounting to $5.6 billion since transitioning to an ETF. Some industry observers attribute this to Grayscale investors eager to divest from GBTC, especially considering the trust's historical restriction on selling shares at their net asset value.

Moreover, GBTC's fee structure, featuring a 1.5% fee, is significantly higher than that of its competitors, whose expense ratios range from 0.19% to 0.39%.

Grayscale's Response and Adjustments

In response to the outflows, Grayscale adjusted its Bitcoin holdings by reducing them by 5,086 BTC, valued at approximately $218 million. Meanwhile, BlackRock's IBIT and the Fidelity Wise Origin Bitcoin Fund (FBTC) have witnessed substantial net inflows of about $2.8 billion and $2.5 billion, respectively, since their market debut.

Despite Grayscale's outflows, the collective net inflows into the 10-spot Bitcoin ETFs exceeded $1 billion on Monday, reaching nearly $1.5 billion by Wednesday.

Industry Adjustments and Competition

In a competitive move, Invesco and Galaxy Asset Management announced a reduction in their fund's fee from 0.39% to 0.25%, aligning with most competitors. The total trading volume for all active spot Bitcoin ETFs is approaching $27 billion, according to Bloomberg Intelligence ETF analyst James Seyffart.

The influx of funds into various ETFs has played a role in mitigating bearish sentiment, contributing to the recovery of Bitcoin from below the $40,000 mark. The evolving landscape of Bitcoin ETFs continues to reshape the dynamics of the cryptocurrency market.