Key Points
- Grayscale Investments’ Bitcoin ETF holdings have decreased by 50% before the expected Bitcoin halving event.
- BlackRock’s iShares Bitcoin Trust (IBIT) has seen a surge in holdings, but has not absorbed all of GBTC’s outflows.
Grayscale Investments, a prominent investor in Bitcoin (BTC), has experienced a 50% reduction in its spot BTC exchange-traded fund (ETF) holdings. This decrease comes just before the anticipated Bitcoin halving event.
The Grayscale Bitcoin Trust ETF (GBTC) saw its Bitcoin holdings drop from 619,220 BTC to 309,871 BTC between the first day of trading on January 11 and April 16, its 66th day of trading. Currently, these holdings are valued at $19.7 billion.
The Halving Events
This reduction in GBTC holdings, often referred to as the “GBTC halving”, occurred just two days before the highly anticipated Bitcoin halving event. The Bitcoin halving, which happens every four years, or every 210,000 blocks, cuts the mining reward by 50%, from 6.25 BTC to 3.125 BTC. This event often triggers rallies in the crypto market.
Although these two events are not related, their close timing adds another interesting detail to the history of Bitcoin-related events. GBTC has seen a significant sell-off since the start of trading, which has greatly affected the Bitcoin price.
Trading Fees and Competitors
High trading fees have been largely blamed for the outflows. GBTC had the highest fees among the 10 spot Bitcoin ETFs in the US at the start of trading, charging 1.5%. Most Bitcoin ETFs have since reduced their fees to boost competitiveness, setting trading commissions between 0.2% and 0.4%.
BlackRock’s iShares Bitcoin Trust (IBIT), GBTC’s main competitor, charged a 0.25% fee at the start of trading. This did not include a 0.12% discount for the first $5 billion of traded assets during the waiver period.
IBIT has attracted significant inflows, with holdings surging more than 10,000% from just 2,621 BTC at the start of trading to 272,548 BTC on April 16. Despite this rapid growth, IBIT has not absorbed all of GBTC’s outflows of 309,349 BTC.
However, along with eight other issuers, the spot Bitcoin ETF providers have accumulated around 224,552 BTC, excluding GBTC, since the start of trading. As of April 16, 2024, the 10 spot Bitcoin ETFs collectively held around 862,162 BTC, worth $54.7 billion.