Why BlackRock’s Bitcoin ETF surpassing Grayscale’s GBTC is bullish

Why BlackRock’s Bitcoin ETF surpassing Grayscale’s GBTC is bullish
BlackRock's Bitcoin ETF has taken the crown from Grayscale Investments' GBTC. Credit: Darren Joseph
  • BlackRock’s Bitcoin ETF has overtaken Grayscale’s in size.
  • That means investors may stop paying so much attention to GBTC outflows — and focus on IBIT inflows instead.

Four months after the launch of spot Bitcoin exchange-traded funds, BlackRock’s iShares Bitcoin Trust, or IBIT, has surpassed the Grayscale Bitcoin Trust, or GBTC, in size.

“It’s official now. IBIT is king of the category and probably will be for decades,” Bloomberg Intelligence ETF analyst Eric Balchunas posted on Wednesday.

“The low fees, big boy liquidity, and iShares brand name [are] just too powerful,” he added.

IBIT closed Tuesday with $19.68 billion in assets vacuumed up — putting it $30 million ahead of GBTC, per Bloomberg data.

“This represents a significant shift in the supply/demand equation,” according to crypto market maker Wintermute.

“Since its conversion in January, the GBTC unwind has been considered a supply overhang, reducing the positive impact of inflows seen in other vehicles,” Wintermute said.

Grayscale converted its Bitcoin trust into an ETF after it received approval to do so from the Securities and Exchange Commission.

Now, investors will stop paying so much attention to GBTC, Wintermute said, and instead focus on IBIT’s inflows, which “may now drive sentiment and a renewed interest in Bitcoin.”

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Battle of the titans

IBIT launched on January 11 and has amassed its haul in 20 weeks. GBTC, on the other hand, has existed since 2013 and had roughly $27 billion in assets prior to its conversion into an ETF.

But GBTC’s head start didn’t last. Because of the way the trust was initially designed, GBTC shares could only be created, not redeemed.

That meant that GBTC holders couldn’t cash out on their gains until the product converted into an ETF. When that happened at last, the fund experienced a record $17 billion in outflows.

In other words, GBTC lost more than half its assets — the only reason they retain close to $20 billion is because Bitcoin’s price appreciated at the same time.

But IBIT’s performance has been just as “absurd,” Balchunas said.

“There’s only been one ETF in history to reach $20b in assets in under 1,000 days. [JPMorgan’s] JEPI, which did it in 985 days. IBIT is a hair away at 137 days,” Balchunas posted.

Tom Carreras is a markets correspondent at DL News. Got a tip about Bitcoin ETFs? Reach out at tcarreras@dlnews.com