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Grayscale’s GBTC distorts the ETF picture

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One of the primary drivers of crypto’s appreciation are easing monetary conditions. Last cycle, Covid-19 fiscal and monetary policy measures kicked off the bull market. Lower interest rates, furlough and stimulus checks, meant individuals had more time, and money, on their hands. Many chose to delve into financial markets with their additional resources. This was a perfect storm for the crypto market - growing nearly 28 times within 20 months. Is the perfect storm this time not going to include a world-halting pandemic and simply be crypto ETF adoption? 
One of the primary drivers of crypto’s appreciation are easing monetary conditions. Last cycle, Covid-19 fiscal and monetary policy measures kicked off the bull market. Lower interest rates, furlough and stimulus checks, meant individuals had more time, and money, on their hands. Many chose to delve into financial markets with their additional resources. This was a perfect storm for the crypto market - growing nearly 28 times within 20 months. Is the perfect storm this time not going to include a world-halting pandemic and simply be crypto ETF adoption? 

Each day, Coinrule will run through the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets.

One of the primary drivers of crypto’s appreciation are easing monetary conditions. Last cycle, Covid-19 fiscal and monetary policy measures kicked off the bull market. Lower interest rates, furlough and stimulus checks, meant individuals had more time, and money, on their hands. Many chose to delve into financial markets with their additional resources. This was a perfect storm for the crypto market – growing nearly 28 times within 20 months. Is the perfect storm this time going to exclude a world-halting pandemic and simply be crypto ETF adoption instead? 

Last cycle, MicroStrategy and Tesla’s Bitcoin acquisitions convinced everyone the institutions were here. However, the introduction of the Bitcoin ETFs and their $11.2 billion of net inflows, have made it clear the ETFs were a necessity for real institutional adoption. They have legitimised the asset class and have made the step for traditional finance participants significantly less daunting. Michael Saylor has previously estimated that the ETF distribution channels are currently only 10% open. Suggesting we are only seeing the very first wave of demand. 

One of the primary drivers of crypto’s appreciation are easing monetary conditions. Last cycle, Covid-19 fiscal and monetary policy measures kicked off the bull market. Lower interest rates, furlough and stimulus checks, meant individuals had more time, and money, on their hands. Many chose to delve into financial markets with their additional resources. This was a perfect storm for the crypto market - growing nearly 28 times within 20 months. Is the perfect storm this time not going to include a world-halting pandemic and simply be crypto ETF adoption? 

Even with the gates to Bitcoin now open for traditional finance, last week the Bitcoin spot ETFs experienced their first week of five daily net outflows. On the face of it, this seems bearish. However, Grayscale’s GBTC was the main culprit with just over $2 billion flowing out of the ETF. Excluding GBTC, the remaining nine ETFs actually had net inflows of over $1.1 billion. 

A report from Coinbase has suggested the primary contributor to GBTC’s outflows has been the estate of the now-bankrupt crypto lending giant, Genesis Global. The crypto lender failed back in early 2023 after the collapse of FTX. It seems the estate has been exchanging their shares in GBTC for Bitcoin. 16,800 BTC was spotted flowing into two of the estate’s wallets. The majority of GBTC outflows have had this net-neutral effect on the market, as GBTC sellers buy other ETFs or Bitcoin. 

Ironically, so far this cycle, there has been a strong contrast in the main topics at the forefront of the crypto zeitgeist: ETF adoption and memes. Both on completely opposite sides of the risk spectrum, they cater towards two radically different approaches to gaining exposure to this market. They also target two different types of buyers: institutions and retail. Crypto truly has something for everyone.