Grayscale Is Losing the ETF Game, Transfers $800 Million More to Coinbase

In the initial days of trading as an ETF, Grayscale Bitcoin Trust (GBTC) has witnessed a substantial outflow of funds, with investors withdrawing approximately $579 million, as reported by Bloomberg on Tuesday. This comes in sharp contrast to the positive trend observed in the other nine spot Bitcoin ETFs, which collectively attracted nearly $819 million.

On January 16, GBTC transferred 8,730 Bitcoin, valued at over $376 million, to Coinbase Prime deposit addresses, as per data from blockchain analytics platform Arkham Intelligence. This has raised speculation that the fund might have been compelled to sell Bitcoin holdings amid a decline in its share price.

Analysts argue that these outflows from GBTC are potentially influencing the downward trend observed in Bitcoin’s price over the preceding days. 

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GBTC, one of the world’s largest holders of Bitcoin, was one of the funds that received approval from the Securities and Exchange Commission (SEC) to convert into an ETF last week. Since this conversion, authorized participants gained the ability to purchase shares from investors and redeem them for the cash equivalent of the Bitcoin they represent. Consequently, the trust is obligated to sell off Bitcoin to meet these redemptions, typically occurring when the GBTC price is lower than the Bitcoin value it holds.

On January 12, Arkham data indicated a $41 million transfer to a Coinbase Prime wallet, suggesting a potential Bitcoin sale by the trust. Analysts speculated that this outflow might have contributed to Bitcoin’s sharp decline on that day.

Bloomberg analyst Eric Balchunas claimed on X that GBTC experienced outflows of $95.1 million on January 11 and $484.1 million on January 12. In contrast, other Bitcoin ETFs like the iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund saw inflows of nearly $1.4 billion over the same period.

Analysts aren’t at all surprised by the outflows, and many traders are pointing to GBTC’s high fees. The fund charges a 1.5% management fee, while the second-most expensive fund, the VanEck Bitcoin Trust, charges 0.25%.

X user MartyParty, a crypto commentator and host of Crypto Traders Club Space, noted that GBTC transferred another 19,000 Bitcoin, which converts to about $800 million to Coinbase as the markets opened on January 17. GBTC has yet to comment on the matter.


Information for this story was found via Bloomberg, X, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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