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US Spot Bitcoin ETFs See Red: Grayscale’s GBTC and Top Funds Hit Hard

US Spot Bitcoin ETFs See Red: Grayscale’s GBTC and Top Funds Hit HardOn Monday, unlike their ethereum counterparts, spot bitcoin exchange-traded funds (ETFs) witnessed outflows totaling $168.44 million. The primary contributors to this decline were three funds, with Grayscale’s GBTC taking the lead in outflows. 3 Leading Bitcoin ETFs Experience Major Outflows Grayscale’s Bitcoin Trust (GBTC) experienced a significant outflow of $69.12 million, bringing its total net […]

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US Spot Bitcoin ETFs Reverse Outflows With $100M Inflows

US Spot Bitcoin ETFs Reverse Outflows With 0M InflowsU.S. spot bitcoin exchange-traded funds (ETFs) experienced inflows on Wednesday, following two consecutive days of outflows. The 11 ETFs trading in the United States amassed $100.9 million, with Fidelity’s FBTC leading the way. Fidelity’s FBTC Tops Bitcoin ETF Inflows With $51M On Wednesday, spot bitcoin ETFs reversed their two-day outflow trend. The group secured $100.9 […]

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US Bitcoin ETFs See $200 Million Outflow; Grayscale Leads With $121 Million

US Bitcoin ETFs See 0 Million Outflow; Grayscale Leads With 1 MillionU.S. spot bitcoin exchange-traded funds (ETFs) witnessed $200.31 million in outflows on Tuesday following the $64 million in outflows the day prior. Grayscale’s Bitcoin Trust (GBTC) shed the most with a $121 million reduction. Spot Bitcoin ETFs Lose Ground Spot bitcoin ETFs have recorded two days of outflows so far as Tuesday’s trading sessions saw […]

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Report: Spot Bitcoin ETFs Lead Crypto Investment Surge With Record Inflows

Report: Spot Bitcoin ETFs Lead Crypto Investment Surge With Record InflowsIn a recent turn of events, spot bitcoin exchange-traded funds (ETFs) emerged as the market leaders in the realm of cryptocurrency investment products last week. According to a recent report by Coinshares, these funds attracted $1.1 billion in inflows, marking the highest assets under management (AUM) since the early days of 2022. Coinshares Report Shows […]

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The biggest Bitcoin fund just hit a record -35% discount — A warning for BTC price?

Institutional interest in Grayscale Bitcoin Trust continues to dwindle 10 months into the crypto bear market.

Grayscale Bitcoin Trust (GBTC), a cryptocurrency fund that currently holds 3.12% of the total Bitcoin (BTC) supply, or over 640,000 BTC, is trading at a record discount compared to the value of its underlying assets.

Institutional interest in Grayscale dries up

On Sep. 23, the $12.55 billion closed-end trust was trading at a 35.18% discount, according to the latest data.

GBTC discount versus spot BTC/USD price. Source: YCharts

To investors, GBTC has long served as a great alternative to gain exposure in the Bitcoin market despite its 2% annual management fee. This is primarily because GBTC is easier to hold for institutional investors because it can be managed via a brokerage account. 

For most of its existence, GBTC traded at a hefty premium to spot Bitcoin prices. But It started trading at a discount after the debut of the first North American Bitcoin exchange-traded fund (ETF) in Canada in February 2021.

Unlike an ETF, the Grayscale Bitcoin Trust does not have a redemption mechanism. In other words, GBTC shares cannot be destroyed or created based on fluctuating demand, which explains its heavily discounted prices compared to spot Bitcoin.

Grayscale's efforts to convert its trust into ETF failed after the Securities and Exchange Commission's (SEC) rejection in June. In theory, SEC's approval could have reset GBTC's discount from current levels to zero, churning out profits for those who purchased the shares at cheaper rates.

Grayscale sued the SEC over its ETF application rejection. But realistically, it could take years for the court to give a verdict, meaning investors would remain stuck with their discounted GBTC shares, whose value have fallen by more than 80% from their November 2021 peak of around $55.

GBTC daily price chart. Source: TradingView

Also, GBTC's 12-month adjusted Sharpe Ratio has dropped to -0.78, which shows that the anticipated return from the share is relatively low compared to its significantly high volatility.

GBTC 12-month adjusted Sharpe Ratio. Source: PortfolioSlab.com

Simply put, institutional interest in Grayscale Bitcoin Trust is drying up.

A warning for spot Bitcoin price?

Grayscale is the world's largest passive Bitcoin investment vehicle by assets under management. But it doesn't necessarily enjoy a strong influence on the spot BTC market after the emergence of rival ETF vehicles.

For instance, crypto investment funds have attracted a combined total of almost $414 million in 2022, according to the CoinShares' weekly report. In contrast, Grayscale has witnessed outflows of $37 million, which include its Bitcoin, Ethereum, and other tokens' trusts.

Fund flows by provider. Source: CoinShares

Instead, day-to-day fluctuations in the spot Bitcoin price are heavily driven by macro factors, at least for the time being.

NDAQ versus BTC/USD daily price chart. Source: TradingView

A stronger U.S. dollar also hurts Bitcoin's upside prospects, given their consistent negative correlation over the past year in a higher interest rate environment.

Related: BTC mining firm Compute North files for bankruptcy

For instance, the U.S. dollar index (DXY), which measures the greenback's strength against a basket of top foreign currencies, has climbed over 113, its 20-year high, on Sep. 23. Similarly, yields on 2-year and 10-year U.S. Treasury notes have climbed to 4.21% and 3.69%, respectively.

U.S. dollar index versus US 10-year and US 2-year Treasury yields. Source: TradingView

Several on-chain metrics, however, are suggesting that Bitcoin could bottom out soon based on historical data. However, from a technical standpoint, BTC's price still risks a drop toward the $14,000-$16,000 area, according to independent analyst il Capo of Crypto.

BTC/USD eight-hour price chart. Source: TradingView/Capo of Crypto

Its more likely that [Bitcoin] will reject at the first resistance of 20300-20600," he said while citing the chart above, adding:

"Wait for the bounce, then exit all the markets."

Other Bitcoin analysts have thrown around even lower targets such as $10,000–$11,000, due to this being a historical high-volume range.  

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Canadian Bitcoin ETF sees its third-biggest daily inflow ever

Purpose Bitcoin ETF attracted over 1,000 BTC in inflows on Tuesday, its third-largest daily inflow since launch.

Canada-based Purpose Bitcoin ETF attracted over $38 million worth of Bitcoin (BTC) this Tuesday, its third-largest daily inflow to date.

According to data provided by Glassnode, investors poured about 1,054 BTC into the fund, marginally lower than the inflows recorded on Dec. 6, 2021. However, the capital injection still came out to be almost half the amount that entered the Purpose Bitcoin ETF on its debut on Feb. 22, 2021 — over 2,250 BTC.

Purpose Bitcoin ETF flows. Source: Glassnode

Investors buying the dip?

Bitcoin exchange-traded funds (ETF) mimic the cryptocurrency’s spot price performance, thus allowing investors to gain exposure in its market without holding the actual BTC directly. In simple terms, ETF backers buy real Bitcoin with the money they attract from an investor, thus becoming a proxy method to measure markets’ interest in the cryptocurrency.

Typically, markets believe that strong inflows into funds drive up the underlying assets’ prices by attracting more return-chasing investors. As a result, Bitcoin’s price should move in the same direction as the fund flows — to the upside — in a perfect world.

The higher inflows surfaced despite Bitcoin’s recent price correction, wherein BTC’s price traded around $37,000 on Feb. 3, almost three months after hitting a record high of $69,000. 

BTC/USD daily price chart. Source: TradingView

But in the same period, the total amount of BTC held in the Purpose Bitcoin ETF reserves has climbed from nearly 24,100 to a little over 31,000. That suggests that Purpose ETF investors have been buying the Bitcoin dip.

But the story appears different when one takes all the Bitcoin funds into consideration.

Cautious accumulation in play

According to a report published on Jan. 31 by CoinShares, the Bitcoin funds experienced a weekly inflow of $22 million worth of BTC as of Jan. 28. Meanwhile, its collective year-to-date readings showed about $132 million in BTC exiting the market.

In doing so, the total assets under management at all the Bitcoin funds dropped to their July 2021 low of $29 billion in January before recovering to over $31 billion.

“We are seeing an increasing price sensitivity to monetary policy statements, with the recent FOMC meeting having an immediate intraday price response,” wrote CoinShares, noting that the funds encompassing all the digital assets saw inflows worth $19 million in the week ending Jan. 28. 

“While small, it continues to suggest investors are beginning to cautiously add to positions at these depressed price levels.”
Flow by digital assets. Source: Bloomberg, CoinShares

Eric Balchunas and Athanasios Psarofagis, senior ETF analysts at Bloomberg Intelligence, noted that Bitcoin ETFs would continue to attract inflows in 2022 as investors wait for the United States Securities and Exchange Commission to “approve a spot Bitcoin ETF.”

Spot Bitcoin recovery stalls

As Bitcoin ETFs indicate cautious accumulation, spot BTC has been threatening to continue its correction in the coming sessions.

Related: Willy Woo: ‘Peak fear,’ but on-chain metrics say it’s not a bear market

In detail, BTC/USD resumed its downside moves after failing to reclaim $40,000 on Feb. 1. The correction also appeared as the price tested a downward sloping trendline as resistance, serving as a descending channel’s upper trendline.

BTC/USD daily price chart featuring descending channel. Source: TradingView

That increased Bitcoin’s potential to extend its bearish momentum toward the channel’s lower trendline, sitting near $30,000, a strong support level.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Report Shows Ethereum, Litecoin, Solana ETPs Outperformed Bitcoin Investment Products in November

Report Shows Ethereum, Litecoin, Solana ETPs Outperformed Bitcoin Investment Products in NovemberCryptocompare, the firm that provides institutional and retail investors with real-time and historical cryptocurrency data, has published the firm’s November 2021 Digital Asset Management Review. The report covers crypto exchange-traded products (ETPs), and recent findings show alternative crypto asset investment products are outperforming Bitcoin ETPs. Ethereum-Based Investment Product Trade Volumes Increase Every month Cryptocompare publishes […]

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JPMorgan: Institutional Investors Dump Gold for Bitcoin Seeing It as Better Inflation Hedge

JPMorgan: Institutional Investors Dump Gold for Bitcoin Seeing It as Better Inflation HedgeGlobal investment bank JPMorgan says institutional investors are returning to bitcoin, seeing the cryptocurrency as a better hedge than gold. The firm’s analysts describe three key drivers boosting the price of bitcoin in recent weeks, including assurances that U.S. policymakers will not ban cryptocurrencies. JPMorgan Sees Renewed Interest in Bitcoin JPMorgan published a research note […]

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Boomers Next to Adopt Crypto, a Trillion Dollars Could Flow Into Bitcoin Over the Next Year, Says Novogratz

Boomers Next to Adopt Crypto, a Trillion Dollars Could Flow Into Bitcoin Over the Next Year, Says NovogratzGalaxy Digital CEO Mike Novogratz has predicted that as much as a trillion dollars could flow into bitcoin over the next year as wealthy baby boomers get into cryptocurrency. With the example of Morgan Stanley, he says that more banks will start offering bitcoin exposure to their customers. $1 Trillion Could Flow Into Bitcoin Michael […]

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