Bitcoin ETF Inflows Drop Pre-Halving: IBIT Closes Gap with GBTC

• The Bitcoin ETF market has been heating up with IBIT rapidly gaining ground on the long-established leader.
• Grayscale’s dominance has been challenged by BlackRock’s lower fees and aggressive accumulation.
• A dip in the Bitcoin price has coincided with a slowdown in net inflows for both ETFs.

The landscape of Bitcoin investing is undergoing a significant shift. BlackRock’s iShares Bitcoin Trust (IBIT), a spot Bitcoin exchange-traded fund (ETF) , is steadily gaining ground on Grayscale’s Bitcoin Trust ETF (GBTC), the long-standing leader in the space.

Bitcoin ETF Market Share Heats Up

While IBIT recorded its second-lowest daily inflows of $24.9 million on April 17, according to Dune data , its current market share of 32.6% is quietly approaching Grayscale’s dominant 36.8% share. GBTC currently holds roughly $19 billion worth of Bitcoin , putting it $2.2 billion ahead of IBIT’s $16.8 billion.

However, IBIT’s rapid accumulation since its launch suggests a potential future upset. Notably, Grayscale’s Bitcoin holdings have shrunk by 50% before the Bitcoin halving , dropping from 619,220 BTC on January 11 to its current level of 308,105 BTC.

Top Bitcoin ETFs by Market Share. Source: Dune , Cointelegraph

Conversely, BlackRock’s holdings have surged over 10,200%, rising from a mere 2,621 BTC at launch to its current position of 272,550 BTC. While accumulation has slowed since a peak of $866 million in net inflows on March 13, the overall trend is undeniable.

Grayscale’s selling has also shown signs of moderation. Its fourth-largest outflow event since inception occurred on March 19 with $607 million, but outflows have since dwindled to $79 million on April 17, according to Dune data.

IBIT and Grayscale, Bitcoin ETF Flows. Source: Dune , Cointelegraph

Bitcoin Price Dip Coincides with Shift in Trends

This slowdown in outflows coincides with a broader decline in cumulative ETF inflows since March. The week of March 11 saw a significant $2.58 billion in net inflows, whereas last week only saw $199 million. 

This trend aligns with a recent dip in Bitcoin’s price, which fell 10.7% during the previous week to trade at $62,971 as of April 18, 2024 (UTC). Notably, Bitcoin dipped below $60,000 on April 17, just days before the halving event.

Bitcoin ETFs Weekly Net Flows. Source: Dune , Cointelegraph

Analysts attribute Grayscale’s historical sell-off to its hefty 1.5% trading fee, the highest among all US Bitcoin ETF issuers. In contrast, BlackRock’s IBIT boasts a significantly lower 0.25% fee, making it a more attractive option for cost-conscious investors. Additionally, Franklin Templeton’s ETF charges an even lower fee of just 0.19%.

Timeline Overview of Bitcoin ETF Market Share Shift

Here’s a look at the timeline showing BlackRock’s IBIT gaining significant ground on Grayscale’s GBTC in the Bitcoin ETF market:

• Before Jan 11: Grayscale Bitcoin Trust (GBTC) holdings at 619,220 BTC.
• Jan 11, 2024: Launch of iShares Bitcoin Trust (IBIT) with initial holdings of 2,621 BTC.
• March 11: Weekly net inflows into Bitcoin ETFs peak at $2.58 billion.
• March 13: IBIT sees its highest daily net inflows of $866 million.
• March 19: Grayscale experiences its 4th largest outflow event of $607 million.
• April 17: IBIT market share reaches 32.6%, GBTC holds 36.8% with $19 billion in Bitcoin. IBIT holdings at 272,550 BTC, GBTC holdings down to 308,105 BTC. Daily net inflows into IBIT slow down to $24.9 million. Grayscale outflows dwindle to $79 million.
• April 17-18: Bitcoin price dips to a low of $59,768.

As the cryptocurrency market matures, competition among Bitcoin ETFs is likely to intensify. BlackRock’s competitive fee structure and impressive accumulation rate position IBIT as a serious contender to Grayscale’s long-held dominance. While it remains to be seen if IBIT can ultimately dethrone GBTC, the race for market share is undoubtedly heating up.

On the Flipside

• Despite IBIT’s growth, Grayscale’s GBTC still holds a larger market share and a higher total value of Bitcoin.
• The recent dip in Bitcoin’s price could dampen investor enthusiasm for both ETFs, impacting future growth.

Why This Matters

BlackRock’s IBIT is rapidly gaining ground on Grayscale’s GBTC, not just in market share but also in holdings, potentially signaling a major shift in leadership for Bitcoin ETFs, with lower fees being a key driver. This competition could benefit investors by driving down costs and increasing accessibility to Bitcoin exposure.

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