Higher-cost crypto funds suffer as spot bitcoin ETFs hit $4 billion of inflows

Quick Take

  • Higher-cost crypto fund issuers in the U.S. have seen $2.9 billion worth of outflows — compared to $4 billion of total inflows to the new spot bitcoin ETFs since launch — according to CoinShares.
  • Last week, digital asset investment products witnessed minor outflows of $21 million overall — driven by incumbents like the ProShares bitcoin futures ETF and Grayscale’s converted GBTC fund.

Higher-cost incumbent crypto fund issuers in the United States have witnessed $2.9 billion worth of outflows since the new spot bitcoin exchange-traded funds launched on Jan. 11, according to CoinShares’ latest report.

Grayscale’s GBTC has dominated the outflows, seeing over $2.8 billion exit the fund amid fees of 1.5% and likely profit-taking after converting to an ETF following years of trading at a discount to net asset value. (Discount to NAV means how much lower the market price of each share is than the value of the bitcoin it represents.)

Fees for Grayscale’s converted fund and incumbents, like ProShares’ bitcoin futures ETF (BITO) at 0.95%, are significantly higher than those offered by the new spot bitcoin ETF products — many of which carry reduced or zero fees initially and permanent fees ranging between 0.2% and 0.5%.

However, the newly-issued spot bitcoin ETFs have outstripped those outflows, attracting total inflows of $4 billion, or $1.2 billion net of Grayscale’s converted fund since launch.

Minor outflows last week as trading volumes spike

Digital asset investment products witnessed minor outflows of $21 million last week overall, led by $25 million worth of net outflows from bitcoin-based funds. “Investors saw recent price weakness as an opportunity to add to short-bitcoin investment products, seeing $13 million inflows,” CoinShares’ Head of Research James Butterfill added. Bitcoin BTC +1.33% has fallen around 5% over the past week to $40,900, according to The Block's price page.

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Weekly crypto asset flows. Image: CoinShares.

Altcoin investment products also suffered, with ether and Solana funds registering outflows of $14 million and $8.5 million, respectively. However, blockchain equities performed better, with $156 million worth of inflows adding to a nine-week run totaling $767 million.

Regionally, last week’s flows suggested migration to the U.S., Butterfill said, with $263 million worth of inflows overall, compared to $297 million in combined outflows from Canada and Europe.

Meanwhile, trading volume spiked seven times the 2023 weekly average last week. Trading volume for bitcoin investment products totaled $11.8 billion — representing 63% of all bitcoin volume on trusted exchanges and highlighting the dominance of exchange-traded product activity currently, according to Butterfill.


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© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

James Hunt is a reporter at The Block, based in the UK. As the writer behind The Daily newsletter, James also keeps you up to speed on the latest crypto news every weekday. Prior to joining The Block in 2022, James spent four years as a freelance writer in the industry, contributing to both publications and crypto project content. James’ coverage spans everything from Bitcoin and Ethereum to Layer 2 scaling solutions, avant-garde DeFi protocols, evolving DAO governance structures, trending NFTs and memecoins, regulatory landscapes, crypto company deals and the immersive metaverse. You can get in touch with James on Twitter or Telegram via @humanjets or email him at [email protected].

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