Bitcoin ETF had a single-day net outflow on March 19. Why is the ETF "water pipe" so important?

Original title: "3.19 Bitcoin ETF single-day net outflow, why is the ETF water pipe so important?"

Original author: 0xTodd, partner of Nothing Research Fund

How to check the net inflow/outflow data of Bitcoin $BTC spot ETF?

[Don’t ask for help series]

1. Farside data: https://farside.co.uk/?p=997

2. The Block data: https://theblock.co/data/crypto-markets/bitcoin-etf/spot-bitcoin-etf-flows

Q: Why should I care about the inflow and outflow of Bitcoin ETF?

A: Bitcoin's spot ETF is the most important water pipe for US stock funds to Crypto. As long as there is no major trend reversal in this water pipe, Bitcoin's performance will not be too bad.

Q: Really? How much money has this ETF water pipe brought?

A: Currently, BlackRock and Fidelity lead 10 ETFs (excluding Grayscale) to buy more than 500,000 Bitcoins in total, bringing more than 30 billion US dollars inflows to the industry, and you have to know that these are all real money.

Data source: https://coinglass.com/bitcoin-etf

Q: Why emphasize "net" inflows?

A: Because Grayscale $GBTC investors continue to redeem BTC, that is, "outflow". Including the outflow of GBTC, the net inflow of 11 ETFs still exceeds 12 billion US dollars.

Q: Have many ETFs started to outflow? A: Basically only Grayscale has been outflowing.

Some data:

Before the ETF was approved, Grayscale's "small ETF" had accumulated 600,000+ bitcoins;

More than two months after the ETF was approved, Grayscale still has 380,000 bitcoins left.

Q: Grayscale is the hero in the approval of the ETF, so why has it been losing money?

A: Two reasons.

(1) Migration needs: Grayscale's management fee is very expensive, with an annual management fee of 1.5%. Other institutions generally charge 0.2%-0.25%, and some even waive fees.

(2) Exit needs: Grayscale was established very early, and $GBTC investors had an average position of about $27.8 (from: webull). The current price is $57.4, which has doubled.

$GBTC’s big investors include the bankrupt 3AC and FTX, which have strong motivation to sell.

For BlackRock’s $iBTC, the average cost is probably around $30, but now it’s only $36, so the motivation to exit is relatively small.

Q: Why doesn’t Grayscale reduce fees?

Grayscale: We have plans to gradually reduce fees in the next few months.

Grayscale CEO’s defense: We have historical performance to prove that we dare to charge this fee. Other companies don’t have historical performance, so they naturally have to reduce fees for promotion.

PS1: This sophistry is a bit humorous. GBTC and iBTC rose and fell together, leaving aside the fact that Bitcoin’s K-line is the common “historical performance” of all ETFs.

PS2: This vague statement ≈ no plan, take it one step at a time.

PS3: It’s mainly an economic account. 1.5% to 0.25% is too much. Even if Grayscale’s share is reduced to 1/6, that is, another 300,000 BTC will flow out, it will still make more money without reducing fees.

PS4: It’s just a pity that investors are lazy. If they have already put it in the ETF, they are too lazy to take it out; if they have already taken it out, they are too lazy to put it back. Therefore, many of the huge amounts of GBTC redemptions have "accidentally" turned into real selling pressure.

Q: How big is the selling pressure of GBTC?

A: On March 18, GBTC withdrawals broke the record, with $640 million withdrawn in one day, resulting in one of the few net outflow days in the history of BTC ETF, with a net outflow amount of $150 million.

This may also be an important reason for yesterday's sharp drop.

PS: Let's make a small comparison.

Now $BTC mines 6.25 * 144 = 900 BTC every day; after halving in one month, it becomes 450 BTC. In other words, halving reduces the daily selling pressure by 28 million US dollars.

Q: How many BTC does Grayscale still have?

A: 380,000 pieces, disclosed on the official website.  https://etfs.grayscale.com/gbtc

Q: So how was last night (March 19)?

A: Grayscale redeemed 440 million USD of BTC again, while BlackRock was a little weak, with only 75 million USD inflow, resulting in an outflow of 300 million USD, which was larger than yesterday.

Finally, pay attention to emotions and data, as treasures are often hidden in the moment of change.

I wish you all a smooth landing and a firm grasp of the pulse.

Original link