By Michael Scott
The newly approved spot Bitcoin ETFs realized a record nine days of sustained net inflows, with BlackRock and Fidelity realizing sizable gains in market share. A review of February 7 market activity saw the spot Bitcoin ETFs register the ninth consecutive inflow, with Grayscale’s GBTC unable to strangle the bleeding amid high management fees.
A reflection on the February 7 market activity shows that the spot Bitcoin ETF products sustained net inflows for nine days. Scrutiny of data from the Farside Investors illustrates that the inflows recorded yesterday were the highest for any trading day in February.
As such, the spot ETFs realized $145 million in inflows. The considerable inflow coincided with Bitcoin regaining ground, with the price rallying 4% to test $44,500.
Fidelity Tops as BlackRock Witnesses Model Inflow
The Farside Investors data shows that Fidelity’s spot Bitcoin ETF (FBTC) gained ground to lead the pack by realizing $130 million in net inflows. Such marked the highest inflow for Fidelity Investments since January 31.
The huge inflow realized by Fidelity pushed the net inflow to $2.7 billion. The daily inflow contrasts with IBIT issued by BlackRock, which registered a modest $56 million inflow. Nonetheless, the latter saw its net inflows test $3.3 billion.
Grayscale has yet to halt the bleeding, leaving GBTC with a minor $81 million outflow. The net inflow increased the outflows to $6.2 billion, as illustrated by the Farside Investors.
Glassnode attributed the outflow witnessed in GBTC to the short-term profit-taking replicated within the Bitcoin block space by the new investors. The report considers such investors to be within the low-risk categories. Nonetheless, the slowdown witnessed in GBTC outflows arises from the reduced risk attained across the broader market following the sell-off by profit takers.
The inflow realized by most spot Bitcoin ETFs increased the collective inflows for the newly approved products to $1.7 billion. This increase underscores increased investor confidence in the sector.
BlackRock and Fidelity Affirms Leadership as Grayscale Struggles to Contain Bleeding
The scrutiny of the market activity by JPMorgan illustrated that Fidelity and BlackRock exchange-traded funds (ETFs) harbor an advantage unmatched by Grayscale. The analysis by the American Investment Bank illustrates that BlackRock and Fidelity have superior liquidity metrics linked to their market breadth.
The JPMorgan analysts show that though Grayscale’s GBTC realized a slowdown in the outflows in the fourth week since converting from Trust to spot Bitcoin ETF, it faces fierce competition. In particular, BlackRock and Fidelity ETFs compete with their respective ETFs, leveraging the issuer’s liquidity.
The competition appears stiff unless Grayscale substantially reduces the fees. JPMorgan analysts warn that GBTC cannot stop bleeding unless the issuer reduces the management fees that are scaring investors to another spot: Bitcoin ETFs.
High Management Fees Scaring Investors from GBTC
Presently, Grayscale has the highest fees for the spot Bitcoin ETF. Such revelation comes from the awareness that Grayscale lowered the management fee from 2% to 1.5%. The changes were announced when transitioning to the spot Bitcoin ETF.
The move to lower the management fees has yet to bear fruit, given that Grayscale’s costs are still higher than those of the competitors. JPMorgan lead analyst Nikolaos Panigirtzoglou affirmed that BlackRock and Fidelity ETFs command an advantage over GBTC, as illustrated by two liquidity metrics.
JPMorgan evaluated the market breadth and liquidity in the recently approved ETFs. Primarily, the Hui-Heubel ratio constitutes a proxy for the market breadth. The analysts reveal that GBTC illustrates value four times larger than the chasing duo – Fidelity and BlackRock. It affirms that the pair has considerably superior market breadth, unlike GBTC.
Simultaneously, JPMorgan examines the average absolute deviation of closing prices relative to the net asset value (NAV).
The recent data shows that the ETF price deviation relative to the Fidelity and BlackRock’s spot Bitcoin ETFs matches levels witnessed during the GLD Gold ETF. The analysts explain that such reveals portray enhanced liquidity. The analysts indicate that the deviations observed in GBTC ETF are high, thus suggesting lower liquidity.
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