Posted:
- Bitcoin’s market capitalization shot up after more than two years
- GBTC director expressed confidence in monitoring prices accurately
The king’s coin is back! On February 14, Bitcoin (BTC) regained its market cap of $1 trillion, a level not seen since late 2021. This increase in market value was mainly driven by significant inflows into US Bitcoin Exchange Traded Funds (ETFs).
Thomas Fahrer, co-founder of BTC tracking platform Apollo, took to X (formerly Twitter) to highlight the extraordinary influx of investments.
We are witnessing a total acceleration of #BTC ETF inflows.
First 20 trading days ~42K BTC inflow
Last 4 trading days ~43,000 BTC inflows ????
???????????? pic.twitter.com/IqvX7wI13b
—Thomas | heyapollo.com (@thomas_fahrer) February 15, 2024
Ten places in the last four days alone Bitcoin ETFs have absorbed approximately $2.2 billion at current prices – an accumulation rate that exceeds the first four weeks after their launch.
Ergo the question: how accurate are these ETFs at tracking Bitcoin? David LaValle, Global Head of ETFs at Grayscale Investments, has the answer. In a interview with CNBC TV he clarified:
“The tracking was really remarkable. We’ve seen the Bitcoin ETFs do a great job of holding their position very tightly… and we’ve seen a liquidity profile that was indicative of what we expected.”
GBTC is not concerned about Bitcoin outflows
Since the adoption of spot Bitcoin ETFs, Grayscale’s Bitcoin Trust (GBTC) has seen a significant increase outflow. Despite these challenges, Grayscale has maintained its leading position in the market.
At the time of writing, GBTC owned a whopping 461,983 BTC. On the contrary, BlackRock had 105,280 BTC and Fidelity had 79,752 BTC, as reported by Apollo. Particularly recent data from CryptoQuant showed a shift, showing a decrease in GBTC outflows, with the price premium now turning positive.
LaValle expressed his satisfaction with the current state of GBTC. He noted:
“If you are a leader in the market, have the largest fund and are the product that is looked to for the greatest liquidity and for both investment opportunity and an entry vehicle, then you will see inflows and outflows.”
The director also recognized FTX’s need to liquidate some of its GBTC holdings. However, he pointed out that it did not cross over into another product.
High compensation led to investor exodus?
GBTC has been criticized for its relatively high 1.5% fee, which may deter investors. However, LaValle defended the fee by highlighting GBTC’s 10-year history and strong liquidity. He argued that these factors are more important to investors than just the fees and that they justify GBTC’s costs.
However, this discussion comes at a crucial time, especially since Fidelity has taken an important step by lowering fees on its European Bitcoin ETF. Eric Balchunas, Senior ETF Analyst at Bloomberg, highlighted this on X. He drew attention to the company’s long-term strategic play in the market.
Fidelity has cut the fee for its spot bitcoin ETF in Europe from 75 basis points to 35 basis points (a serious fee cut by any standards shows Fidelity is playing the long game and turning into a Terrordome warrior) as the US fee war unfolds spreads all over the world. @psarofagis https://t.co/SHAsefyNwj
— Eric Balchunas (@EricBalchunas) February 14, 2024