The SEC has approved a handful of spot Bitcoin ETFs, but while funds from two specific issuers are far ahead, Grayscale's GBTC is seeing outflows.
Spot Bitcoin (BTC) ETF inflows amounted to $1.9 billion and $1.6 billion from BlackRock and Fidelity, respectively. They are the dominant issuer among the 10 asset management companies approved by the U.S. Securities and Exchange Commission (SEC) to list their products.
Crypto-native companies Bitwise and Cathie Wood-backed ARK 21Shares followed the two frontrunners. Both recorded inflows of more than $500 million.
Fidelity's Wise Origin Bitcoin Fund (FBTC) and BlackRock iShares Bitcoin Trust (IBIT) accounted for 70% of total inflows into spot BTC exchange-traded products, according to Bloomberg data as of January 24.
BlackRock and Fidelity's ETFs are also among the fastest to reach $1 billion in assets under management (AUM). This may be due to their presence on Wall Street as one of the world's largest financial firms.
Meanwhile, approximately $4 billion was withdrawn from Grayscale's Bitcoin Trust (GBTC) less than two weeks after the SEC filed its approval. Grayscale's product remains the largest spot BTC ETF on the market, with a market capitalization of more than $20 billion and more than 500,000 bitcoins in Coinbase vaults.
Since January 11, when the spot ETF began trading, Grayscale has sent about 93,700 BTC, worth about $3.9 billion, to Coinbase Prime wallets, according to blockchain analytics provider LookOnChain.
The massive outflow appears to have put selling pressure on BTC as tokens are liquidated to meet redemption demand.
Grayscale's 1.5% ETF fee, the highest among issuers, has drawn skepticism and scrutiny. This is the highest fee ever charged by an issuer for these spot BTC ETFs, but Grayscale CEO Michael Sonnenshein supported the company's decision to slightly reduce the previous 2% fee.
Sonnenshein said his company's ETF is the largest, most liquid, and oldest spot BTC ETF on the market. The executive added that other issuers new to the scene have posted fees as low as 0.21 to win over investors in a highly competitive market.