Grayscale Bitcoin Trust Holdings Plummet by 55% in H1 2024

Grayscale faces significant asset outflows as investors shift to new Bitcoin ETFs.

Grayscale Investments disclosed a dramatic reduction in its Bitcoin holdings, with its flagship Bitcoin fund shedding over 348,000 Bitcoin in the first half of 2024. This marks a 55% decrease from its nearly 620,000 Bitcoin holdings prior to converting to a spot Bitcoin ETF in January.

This decline, valued at approximately $22.4 billion, comes as investors migrate to new investment vehicles introduced by major asset managers like BlackRock and Fidelity. The fund's Bitcoin holdings declined from $26.3 billion to $17 billion, highlighting significant investor exodus.

Grayscale's flagship fund, GBTC, experienced $19 billion in net outflows this year, contrasting sharply with the net inflows of $20 billion and $10 billion for BlackRock and Fidelity's ETFs, respectively. To attract investors, Grayscale introduced a Mini Trust with a lower management fee of 0.15%, compared to GBTC's 1.5% fee. Despite this, GBTC's daily outflows have slowed, averaging $30 million over the past ten trading days. The fund has seen limited days of positive inflows since its conversion from a closed-end fund.

The decline in GBTC’s Bitcoin holdings was also influenced by the bankruptcy estates of crypto firms like Genesis and FTX, which sold around $2.5 billion worth of shares in the fund. Over time, the pace of daily outflows has slowed considerably for GBTC, averaging around $30 million in the past ten trading days. Still, the product has only notched 12 days of positive inflows since its conversion from a closed-end fund, peaking at around $63 million in May.

Grayscale, established in 2013, successfully sued the SEC in 2022 to convert GBTC into a spot Bitcoin ETF, a victory that paved the way for spot Bitcoin ETFs this year. Despite the fund’s challenges, this legal triumph has positioned Grayscale at the forefront of Bitcoin investment products.

photo source / Blockonome