BlackRock and ProShares Bitcoin ETFs Surpass GBTC in Daily Trading Volume

Grayscale's Bitcoin Trust(GBTC) has dominated the daily trading volumes of spot bitcoin exchange-traded funds (ETFs) since they began trading on January 11. However, this changed on February 1st when BlackRock and ProShares ETFs saw higher volumes than GBTC for the first time.

GBTC Volumes Decline as Other ETFs Gain Traction

GBTC's lead was largely due to heavy outflows from the trust as investors redeemed their shares to move to the new ETFs. Grayscale's high fees also contributed to investors selling their GBTC shares.

According to data from Bloomberg Intelligence, on February 1st, BlackRock's iShares Bitcoin Trust (IBIT) saw the highest volume at $301 million. ProShares' Bitcoin Strategy ETF (BITO) followed closely with $298 million in volume, surpassing GBTC's $292 million.

This marked the first time any ETF beat out GBTC in daily volume. It also represented the first day that combined trading volumes for all bitcoin ETFs fell below $1 billion since launching in early January.

GBTC outflows have been tapering off in recent days. Outflows peaked at over 24,000 bitcoin on January 11 but decreased to around 4,500 bitcoin by January 30. This selling pressure has likely contributed to bitcoin's recent price decline.

New ETFs Gain Assets as GBTC Bleeds

According to BitMEX Research, GBTC has lost over $5.8 billion in assets since the new ETFs began trading. Meanwhile, the nine new ETFs have attracted combined inflows of $7.2 billion.

The bankrupt crypto exchange FTX recently liquidated its entire 22 million share GBTC position worth around $1 billion. This added significant selling pressure on top of investors fleeing GBTC's higher fees.

JPMorgan analysts believe the bulk of GBTC outflows are now behind us. This could relieve downward pressure on bitcoin's price going forward if accurate.

As of February 2, the new bitcoin ETFs hold approximately $28.6 billion in combined assets. GBTC remains the largest with $18.3 billion in assets but has declined steadily since its peak of $24 billion in early January.

Competition Rising in Bitcoin ETF Market

The new spot bitcoin ETFs have quickly eroded GBTC's first-mover advantage. While Grayscale dominated for years as the only SEC-approved bitcoin investment product, investors now have alternatives with lower fees.

With increasing competition, it seems likely that GBTC will struggle to maintain its dominant position and market share. As the ETF space matures, providers will need to keep fees low and returns high to attract assets.

This new competitive landscape is ultimately a positive development for investors. More choices and lower fees will benefit investors looking for bitcoin exposure through regulated investment vehicles.However, GBTC will need to evolve its product to staunch outflows and remain relevant.