Grayscale Bitcoin Trust Sees First Inflows In 3 Months, Hong Kong ETF Market Gains Traction

Grayscale Bitcoin Trust (GBTC), the world’s largest cryptocurrency investment vehicle, has experienced a notable influx of investor funds for the first time since the January approval of US spot Bitcoin exchange-traded funds (ETFs). 

Grayscale Bitcoin Trust Bounces Back With Inflows

Data compiled by Bloomberg reveals that on May 3, Grayscale’s Bitcoin Trust received approximately $63 million in net inflows. This comes after net outflows totaling around $17.4 billion since the trust’s conversion. 

The outflows experienced in the past were partially linked to bankruptcies in the crypto industry, as defunct companies sought to repay their creditors by withdrawing funds from the trust. 

However, Grayscale’s position as the largest spot Bitcoin ETF in terms of assets under management (AUM) is now facing competition from BlackRock’s iShares Bitcoin Trust (IBIT), which manages $16.91 billion.

Grayscale has responded to the changing landscape by announcing plans in March to seek approval from the Securities and Exchange Commission (SEC) to spin off a portion of Grayscale’s assets into a new, lower-fee Bitcoin Mini Trust. The exact fees for the Mini Trust are yet to be determined.

Hong Kong Market Surges Amid Growing Demand

Eric Balchunas, an ETF expert at Bloomberg, commented on the recent developments in the Bitcoin ETF market. He noted that for the first time, there were positive net flows without any outflows among Bitcoin ETFs, stating: 

Not going to spike the football like some did during the outflow period, but will point out that over 95% of the ETF investors held during what was a pretty nasty and persistent downturn.

Balchunas emphasized that while outflows and inflows are expected to occur, the track record suggests that ETFs generally witness net growth and demonstrate resilient investor sentiment.

In contrast to the US market, Hong Kong has also made advancements in the Bitcoin ETF space. Farside data suggests that the launch of Bitcoin and Ethereum ETFs in Hong Kong is less significant than their US counterparts. 

However, a new HK ETF Flow dashboard has been introduced due to popular demand. Balchunas acknowledged the relatively smaller scale of the Hong Kong ETF market compared to the US but highlighted the local market’s rapid growth. He stated:

The HK ETFs at $310 million are equivalent to $50 billion in the US market. So, in that regard, these ETFs are already as significant in their local market as the US ones are in theirs.

As of the time of writing, the leading cryptocurrency in the market is valued at $63,300 per coin, reflecting a 1.4% decrease in price over the past 24 hours. The decline occurred after an unsuccessful endeavor to establish a stable position above the $65,000 threshold during the early hours of Monday’s trading session.

Featured image from Shutterstock, chart from TradingView.com