$640M exits Grayscale’s Bitcoin ETF GBTC in single day as crypto sentiment cools

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Bitcoin price extended losses on Tuesday, as the market digests the impact of a record daily outflow from Grayscale’s GBTC, the largest spot Bitcoin exchange-traded fund (ETF).

On Monday, Grayscale’s converted GBTC spot bitcoin ETF saw outflows of $642.5 million, surpassing the previous record of $640.5 million set on January 22. Additionally, Fidelity’s Bitcoin ETF, the second-largest fund, saw its inflows drop to a mere $5.9 million, the lowest since its inception, according to Farside Investors data.

The leading digital currency fell up to 7.1% on Tuesday, with its value hovering around $62,500 in London’s morning trading session. Other major cryptocurrencies, including Ethereum, Solana, and Dogecoin, also saw declines.

The overall market for spot Bitcoin ETFs reported a net outflow of $154.3 million. Despite $451.5 million inflows into BlackRock’s dominant IBIT ETF, the sector couldn’t offset GBTC’s massive outflows, leading to a net negative flow for the first time since March 1.

Spot Bitcoin ETF trading has seen a bit of a slowdown lately, with the daily trading volume for U.S. funds decreasing to $4.2 billion on Monday. This volume is substantially lower compared to the previous week’s range of $5.5 billion to $7.7 billion and is less than half of the record daily trading volume of $9.9 billion set on March 5.

BlackRock (NYSE:BLK)’s IBIT ETF maintained its lead in trading volume, reaching $2 billion yesterday, while Grayscale’s GBTC and Fidelity’s FBTC followed with $1 billion and $630 million, respectively. The cumulative trading volume for all spot bitcoin ETFs now stands at $145.8 billion, with BlackRock’s IBIT capturing a 48.7% market share by trading volume.

Meanwhile, Grayscale is planning to cut the fees for its flagship product, according to CEO Michael Sonnenshein. The announcement comes as the manager of the $26-billion Bitcoin Trust has experienced outflows totaling more than $12 billion since its conversion into an ETF in early January.

Sonnenshein revealed these plans during an interview with CNBC, suggesting that the reductions would occur as the crypto ETF market continues to mature.

Historically, GBTC has been criticized for its higher-than-average fees, especially in comparison to traditional ETF providers like BlackRock and Fidelity. Currently, Grayscale charges a 1.5% management fee for GBTC holders.

Sonnenshein defended the fee structure, citing the early-stage development and unique challenges of the crypto ETF market. However, he acknowledged that fees are expected to decrease over time with market maturity and fund growth.