Key Points
- Spot Bitcoin ETFs have experienced significant success in their first five months, with BlackRock’s IBIT leading the pack.
- Grayscale’s GBTC, which started strong, has seen a decline in AUM, while other ETFs have been growing.
The first five months of Spot Bitcoin ETFs have been marked by impressive success.
BlackRock’s IBIT has been the standout performer, attracting investors with its association with the world’s largest asset manager and a competitive 0.25% fee.
Competition in the Market
However, IBIT was not the largest spot Bitcoin ETF by assets under management (AUM) initially.
Grayscale’s GBTC was its main rival, having started with a significant fund size due to its conversion from a trust into a fund.
At the start of spot ETF trading, Grayscale held roughly 619,220 BTC, valued over $28.5 billion.
In contrast, IBIT began with a seed amount of $10 million and has been growing its AUM through inflows.
Shift in Market Dominance
Unlike other funds, Grayscale experienced heavy outflows upon launch.
This led to a general trend of GBTC’s AUM declining while other ETFs grew, challenging GBTC’s initial market dominance.
On May 29, IBIT surpassed GBTC, becoming the spot Bitcoin ETF with the most assets.
This shift occurred during a strong period for spot Bitcoin ETFs overall, which have seen net positive flows since May 13.
Meanwhile, Grayscale’s outflows have slowed, allowing the inflows into other funds to balance them more frequently.
Many issuers are now preparing their S-1s for spot Ethereum ETFs after their 19b-4s were approved last month.
Grayscale will once again start with a significant amount of ETH, valued at about $11 billion at current prices.
A similar dynamic is expected in the Ethereum space as new competitors grow and early ETHE holders redeem.
It is also likely that BlackRock will again show the most significant early-stage growth if its fees align with others.
The time it took for Grayscale to lose its position as the largest AUM on the Bitcoin side provides a benchmark for how long it might take on the Ethereum side.
