Grayscale Bitcoin Trust, known by the ticker symbol GBTC, had $5.2 billion of net outflows during the 12 trading days, according to the chart.
Excluding GBTC, which traded in the over-the-counter market before being uplisted to a spot bitcoin ETF, the other spot bitcoin ETFs that began trading Jan. 11 — a group Seyffart refers to as the "Newborn 9" — collectively had net inflows totaling $6.2 billion during the 12 trading days, the chart showed.
Seyffart cited three main reasons that he believed were likely driving the GBTC outflows.
"So, the first one is that … there were bankruptcies, mainly FTX, likely some other institutional players that had capital locked up in GBTC," Seyffart said, adding that GBTC's conversion to a spot bitcoin ETF gave those players the ability to exit their GBTC positions without being forced to sell at a "meaningful" discount. "So, no matter what happened with these ETFs, there was going to be massive selling once this thing converted to an ETF, that was a foregone conclusion."
In addition, there were some people who were buying shares of GBTC not because they wanted long-term exposure to bitcoin, but instead as way to bet on the Securities and Exchange Commission's approval of spot bitcoin ETFs, he said.
"So once that ETF approval happened, there was likely a bunch of people that just took their money out," Seyffart said, adding that it was a "buy-the-rumor, sell-the-news," type of situation for such investors.
"And the third group of people are people that were long-term holders of GBTC predominantly in tax-advantaged accounts because they don't have to worry about capital gains," the analyst said. "And GBTC charges a 1.5% fee where most of these other (spot bitcoin ETFs) have fee waivers and even after fee waivers are charging just something around 20 basis points."
Consequently, investors seeking long-term bitcoin exposure who held GBTC in tax-advantaged accounts such as individual retirement accounts are "moving money from GBTC to these other bitcoin ETFs," Seyffart said.
"Grayscale blazed a path for all spot bitcoin ETFs to come to market, and — as promised — the Grayscale team lowered GBTC's fee upon uplisting to NYSE Arca," said Grayscale Investments, GBTC's sponsor, in a statement provided by a spokeswoman.
In August, a federal appeals court ruled in favor of Grayscale in its closely watched case against the SEC over the regulator's denial of an application to convert GBTC to a spot bitcoin ETF.