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Massive ETF Outflows: Grayscale May Deplete Its Bitcoin Holdings by Late July

Record outflows undermine the U.S. Bitcoin ETFs market 

On March 19, the U.S. Bitcoin exchange-traded funds (ETFs) experienced their most significant day of collective outflows ever recorded, with an astonishing $326 million withdrawn from 10 funds. This historic financial shift occurred as Bitcoin's price dipped to a U.S. trading day low of nearly $62,000, continuing its descent after peaking at $73,835 the previous week. Grayscale's Bitcoin Trust (GBTC), holding over $23.7 billion in assets under management as of that date, saw the day's highest net outflows at $443.5 million. 

In contrast, ETFs managed by BlackRock, Fidelity, and Bitwise posted net inflows, albeit modest, totaling $117.3 million, marking the day with the second-lowest net inflows for the nine new Bitcoin ETFs, excluding GBTC. BlackRock's iShares Bitcoin Trust (IBIT) led with $75.2 million in net inflows, followed by Fidelity's Wise Origin Bitcoin Fund (FBTC) with $39.6 million, and Bitwise's Bitcoin ETF (BITB) attracting just $2.5 million, its lowest inflow day on record.

The impact on Grayscale: a countdown to depletion?

Grayscale's GBTC is facing an alarming rate of asset depletion, with $443.5 million net outflows recorded on a single day. If this trend persists, Grayscale could exhaust its Bitcoin assets by late July, highlighting a precarious situation for the trust. This comes at a time when the broader cryptocurrency market is witnessing volatility, evidenced by Bitcoin's recent price movements. 

After achieving a new all-time high of $73,835 on March 14, Bitcoin's value plummeted to as low as $62,400 on March 19 during U.S. trading hours. The ETF's significant outflows coincide with this downturn, more than doubling the previous record outflow of $158.3 million on January 24. 

GBTC's transformation from a trust to an ETF on January 11 has seen nearly $12.9 billion in outflows over 49 trading days. The continuous decline in Bitcoin's price, now trading at $61,173, adds to the urgency for investors to reassess their positions amidst this unprecedented market flux.