In August 2023, a federal appeals court ruled in favor of Grayscale Investments, GBTC's sponsor, in its closely watched case against the SEC over the regulator's denial of an application to convert GBTC to a spot bitcoin ETF.
Prior to being uplisted to NYSE Arca as a spot bitcoin ETF, shares of GBTC, which was created as a private placement more than a decade ago, had been publicly traded on the over-the-counter market since 2015, according to Grayscale's website.
"Like most things … there are probably multiple factors at play here," said Jack Fischer, a senior research analyst at LSEG Lipper, when asked why GBTC's outflowed had slowed.
"I think the main reason is a lot of those … early folks that bought into (GBTC) when it was trading OTC and wanted to liquidate, have already exited," Fischer said, adding that there are likely other investors who have decided to hold onto their shares because they want to avoid the capital gains taxes they would incur by selling.
GBTC has a 1.5% sponsor's fee, which is "significantly higher than the rest of the market," he said. GBTC had assets under management totaling $20.7 billion as of Jan. 31, according to Lipper.
BlackRock's iShares Bitcoin Trust, known by the ticker IBIT, and the Fidelity Wise Origin Bitcoin Fund, which has the ticker FBTC, once again led the pack in terms of net inflows, the data for the latest reporting week showed.
The BlackRock ETF saw net inflows of $830 million for the week ended Jan. 31, while Fidelity's fund garnered $663 million, according to Lipper. Still, that was down from the week ended Jan. 24, when IBIT took in $1.12 billion and FBTC attracted $1.05 billion.
As of Jan. 31, BlackRock's fund had assets under management totaling $2.7 billion, while Fidelity's fund had AUM of $2.3 billion, according to Lipper. The iShares Bitcoin Trust and the Fidelity Wise Origin Bitcoin Fund each have a 0.25% sponsor fee, not including waivers.
"The massive inflows into BlackRock and Fidelity were pretty shocking to me," Fischer said. "I didn't think it was going to be at this level."
While it's possible that the race to capture assets might look different a month from now, BlackRock and Fidelity — both "big name brands"— have been the clear winners so far, the analyst said. While both offer "a relatively cheap product," BlackRock and Fidelity are also likely benefiting from the uncertainty that still surrounds the cryptocurrency market, he said. Investor trust in the crypto market "might not be there yet, but the trust … of these institutions is," Fischer said.
"So, I think that plays a big factor," he said.
