Until today, the new Bitcoin ETFs have been traded on the stock exchange for only 4 days, during which they have attracted more than $1.2 billion in net inflows.
So in about a week, since Saturday and Sunday the US stock exchanges were closed for the weekend and Monday they were closed for holidays, the overall AUM of Bitcoin spot ETFs has increased from 28 to over 29 billion dollars.
The boom in inflows thanks to BlackRock’s Bitcoin ETF
The leader in the ranking of ETFs with the highest inflows was iShares Bitcoin Trust (IBIT) by BlackRock.
If the first day of trading, Thursday, January 11, 2024, had attracted only $111 million in inflows, in the other three days it never dropped below $200 million, with a staggering $386 million on Friday and $371 million yesterday.
In total, this single ETF has attracted over one billion dollars in investments in just four days of trading.
As of today, IBIT owns more than 25,000 BTC, making it the second largest ETF in the world in terms of the number of Bitcoin owned.
The collapse of Grayscale
Instead, Grayscale’s ETF, GBTC, has suffered capital losses of over 1.6 billion dollars.
However, it must be said that GBTC has already existed for 10 years in the form of a Trust, and that last Thursday it was simply transformed into an ETF.
The transition to ETFs has finally given its managers the freedom to liquidate BTC, as they had acquired an excess over the years.
The trust has come to own up to almost 620,000 BTC, and in four days of trading it has liquidated almost 30,000, bringing it down to 592,000. The majority of the approximately 28,000 BTC liquidated by Grayscale have been acquired by BlackRock’s ETF.
GBTC had reached a record discount to NAV of almost 50% in December 2022. This is because its market capitalization freely fluctuated with the price of shares in the market, while the BTC in its treasury remained the same.
Since the possibility of converting it into an ETF was proposed, the discount on the NAV started to decrease, reaching 6.5% the day before the approval news.
The first day of landing on the GBTC ETF markets, the discount on NAV had dropped to 1.5%, and now it is below 0.5%. From here on, Grayscale probably won’t need to make any more large BTC liquidations to bring the NAV back in line with market capitalization.
The final net balance
Taking into consideration all the new Bitcoin ETFs, including those from Fidelity, Ark, and Bitwise, their total AUM increased by $1.2 billion in four days, despite the loss of $1.6 billion from GBTC.
It should be noted that in addition to BlackRock’s IBIT, Fidelity’s FBTC has also performed very well in this regard, with over $880 million in inflows.
More detached BITB from Bitwise with 373 million, ARKB from Ark with 271 million, and BTCO from Invesco with 135 million. All the others remained below 100 million dollars of net inflows.
Note that the only day in which the overall net inflows were negative was Tuesday, when GBTC lost $594 million in AUM in a single day. The next day, the decline stopped at $450 million, and it is possible that it will continue to decrease from now on.
Billionaire inflows thanks to new ETFs: the impact on the price of Bitcoin
It may seem that these dynamics have not yet had a significant impact on the price of Bitcoin, as it is still around $42,000/$43,000.
Actually, it is possible that they may have already had it, because following last Friday’s sell the news, the drop stopped just below $42,000, whereas it could have continued.
Many analysts expected a short-term decline to $40,000 or possibly even lower, but such a decline did not occur despite a significantly reduced buying pressure.
Moreover, in fact, the new ETFs have drained more than 10,000 net BTC from the Bitcoin supply, if not 20,000, and this has helped to withstand the decline in buying pressure. It should be noted that from the end of December to the day before the start of trading, the BTC supply on crypto exchanges had increased by 40,000 units.
At this moment, it is therefore unlikely that the drainage of BTC from crypto exchanges by ETFs is already able to raise the price of Bitcoin, but at least it is preventing its descent.
It may take a few more weeks before we see the true impact of the new ETFs on the price of Bitcoin, that is when Grayscale has completely or almost completely stopped liquidating BTC, and the ETFs will probably only drain more from the crypto markets.