Bitcoin investors who expected the price to soar once the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin exchange-traded funds saw their hopes dashed as BTC has instead fallen nearly 14% since the ETFs’ Jan. 11 debut. Analysts are blaming the continued outflows from the Grayscale Bitcoin Trust (GBTC), a 10-year old pre-existing product that converted to a spot ETF the same day. 

Grayscale Bitcoin Trust had more than $28 billion in assets under management at the time of conversion. GBTC has seen a total of $2.2 billion worth of outflows in the five days since it converted, partially offsetting the $3.4 billion in inflows from the other 10 new funds, according to BitMEX Research data. 

“WHEN WILL THE BLEEDING STOP? I don’t know, but this this is some serious daily outflows for The Nine to have to battle every single day.. they’ve done a great job so far but damn its a lot to ask..,” wrote Bloomberg ETF analyst Eric Balchunas on X

In a new research note, a group of JPMorgan analysts led by Nikolaos Panigirtzoglou estimated that approximately $3 billion was invested in Grayscale Bitcoin Trust in 2023 to exploit the trust’s discount to its net asset value (NAV). Now that GBTC is an ETF, some investors who bought GBTC at a discount are now taking profits by exiting the Bitcoin space entirely rather than just shifting to one of the other spot ETFs. The analysts also noted that GBTC maintaining its fee of 1.5%, while other spot ETF issuers went as low as 0.2%, could result in further outflows. 

JPMorgan predicts this rotation could lead to another $1.5 billion exiting GBTC, which would continue to put pressure on Bitcoin’s price for weeks to come. 

The outflows are also providing a hurdle that the other spot Bitcoin ETFs have to surpass in order to appear strong as a group. Their success so far has been led by the $1.23 billion in inflows for BlackRock’s iShares Bitcoin Trust and $1.1 billion for the Fidelity Wise Origin Bitcoin Fund. 

“Money was going to pour out of GBTC no matter what they did as a firm. I think the outflows will eventually level off and slow down to a trickle but the data is telling us that it’s gonna take a little while longer and that it hasn’t started slowing just yet,” said Bloomberg ETF analyst James Seyffart in an email to Unchained on Friday. “Fortunately for the market — in aggregate th[ere] has been more money going into the newborn nine Bitcoin ETFs than has left GBTC.”


Update Jan. 22, 10:06 a.m. EST: Comment from James Seyffart added to the end of article. Tweet from Eric Balchunas moved from end of article to third paragraph.