The Bitcoin ETFs are shattering all records

Bitcoin ETFs set new records despite outflows from the GBTC ETF that could soon intensify due to Gemini exchange sales.

Bitcoin ETF > Gold ETF

Bitcoin ETFs have gotten off to a flying start. No commodity-backed ETF has performed better in its first month. The $5 billion (net) absorbed smashes the 2004 record set by the famous Gold ETF (GLD).

For comparison, it took 250 trading days (nearly a year) for the GLD ETF to reach $5 billion. That’s ten times longer. This comparison by NYDIG takes into account the adjusted value of 2004 dollars.

These figures would be even more impressive without the outflows from Grayscale’s GBTC ETF ($7 billion). Notably due to the liquidation of bankrupt FTX exchange’s holdings.

This first month is still a resounding success. Last week alone, Bitcoin ETFs attracted the equivalent of $2.3 billion. BlackRock’s ETF alone absorbed more than any of the other 3,400 ETFs.

On just last Friday, the 9 new ETFs purchased the equivalent of:

-100% of bitcoins sold by the GBTC ETF.
-100% of the 900 bitcoins mined that day.
-An additional 6,054 bitcoins.

Setting aside the GBTC ETF sales, ETFs are gobbling up about 40,000 bitcoins per week. That’s six times the rate of new bitcoin issuance. It will be twelve times following the halving.

Another very interesting development: US gold-backed ETFs are experiencing a hemorrhage. They have seen total outflows of $2.1 billion since the Bitcoin ETFs launched:

Boomers are selling Gold ETFs, buying Bitcoin ETFs. pic.twitter.com/WHPWxLJpOX

— Asher Hopp (@AsherHopp) February 14, 2024

As a result, gold is down 2% since the beginning of the year. Bitcoin, on the other hand, is up more than 25%…

Renewed outflows from GBTC on the horizon?

Last Tuesday, the judge overseeing the Genesis bankruptcy gave the green light for the liquidation of Genesis’s holdings in the GBTC ETF and other Grayscale funds.

This decision paves the way for the sale of 36 million shares in the GBTC ETF valued at $1.7 billion. When? That is unknown. The exact terms and timeline remain uncertain…

Genesis can either sell its shares on the secondary market or request a cash redemption directly from Grayscale. Regardless of the method chosen, NYDIG estimates that this will probably result in bitcoin sales in the end.

The cumulative outflows from the GBTC ETF have already reached $7 billion and seem to be accelerating in recent days:

#bitcoin "Les entrées nettes montent en flèche, mais les sorties de l'ETF GBTC reprennent de l'ampleur." pic.twitter.com/QYKCBwK42b

— Nicolas Teterel #FixTheFilters (@NTeterel) February 19, 2024

Gemini holds an additional 31 million shares ($1.4 billion) as collateral for a loan Genesis took out as part of its “Earn” program.

“While it is inevitable that these shares will change hands at some point or another, the exact timing of this transaction also remains unknown,” stated Greg Cipolaro, Global Head of Research at NYDIG.

The exchange Coinbase estimates for its part that Gemini’s sales will not disturb the market. “We believe that a large portion of these funds will likely remain within the cryptocurrency ecosystem, contributing to an overall neutral effect on the market,” it reads.

This money will certainly find its way back into bitcoin. But this will result in downward pressure in the short term. Despite this small cloud on the horizon, the planets continue to align for bitcoin.