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Grayscale’s Bitcoin ETF Market Share Drops to 50%

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Grayscale's Bitcoin ETF Market Share Drops to 50%

Grayscale, a crypto asset manager, has seen its spot Bitcoin exchange-traded fund (ETF) lose market share in the United States. The Grayscale Bitcoin Trust (GBTC) now accounts for 48.9% of the total $56.7 billion held between ten U.S. Bitcoin ETFs. This marks the first time since spot Bitcoin ETFs started trading on January 11 that Grayscale’s market share has dropped below 50%. The decline is due to consistent daily outflows from the GBTC, which averaged $329 million per day last week. These outflows have eaten away at the ETF’s market share, which was initially around 99.5%.

In the first month of Bitcoin ETFs going live, the GBTC experienced the largest outflows, with $7 billion leaving the fund in just over a month. The outflows began to slow in late January, leading some analysts to believe they were coming to an end. But in mid-February, bankruptcy courts allowed crypto lender Genesis to liquidate about $1.3 billion worth of GBTC shares, triggering renewed outflows. To date, the GBTC has experienced outflows totaling over $11 billion.

The Grayscale ETF initially functioned as a trust that allowed institutional investors to gain exposure to Bitcoin by locking up funds for at least six months. After winning a court case against the Securities and Exchange Commission and the regulator’s subsequent approval of other Bitcoin ETF applications, the trust was converted into an ETF. This shift allowed institutional investors to remove their capital from the fund or transfer their assets to Bitcoin ETFs with lower fees.

Although the increasing outflows from the GBTC initially concerned the market, the growing net inflows into BlackRock’s iShares Bitcoin ETF and the Fidelity Wise Origin Bitcoin Fund have provided optimism. These funds have generated $16.9 billion worth of inflows since their inception. Many market commentators credit the inflows into the newly launched ETFs as one of the driving factors behind the rapid appreciation in Bitcoin’s price, which reached an all-time high of $72,900 on March 11. BlackRock’s fund now holds over 200,000 BTC, worth approximately $14.3 billion at current prices.

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