BlackRock’s Bitcoin ETF Surpasses Grayscale’s GBTC to Become the Largest Spot Bitcoin Product

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BlackRock’s iShares Bitcoin Trust has taken the lead as the world’s largest fund for Bitcoin, accumulating nearly $20 billion in total assets since its listing in the United States earlier this year.

According to data compiled by HODL15Capital, the exchange-traded fund held $19.68 billion worth of Bitcoin on Tuesday, surpassing Grayscale Bitcoin Trust’s $19.65 billion.

Fidelity Investments holds the third-largest spot with an $11.1 billion offering.

The launch of BlackRock’s Bitcoin ETF, along with Fidelity’s, was part of a group of nine funds that debuted on January 11, coinciding with Grayscale’s conversion into an ETF.

The approval of spot Bitcoin ETFs marked a significant milestone for the crypto industry, making Bitcoin more accessible to investors and sparking a rally that saw the token reach a record high of $73,798 by March.

BlackRock’s ETF Continues to See Highest Inflow

Since its launch, the iShares Bitcoin Trust has attracted the highest inflow, totaling $16.5 billion, while investors have withdrawn $17.7 billion from the Grayscale fund during the same period.

Possible factors contributing to the outflows from Grayscale include higher fees and exits by arbitragers.

Grayscale held 620,000 BTC at the time of the conversion (1/10/2024), which was more than 3% of circulating supply, but refused to lower the fee (1.5% vs 0.2% for peers), even after investors pulled 330,000+ BTC. So much for the "differentiated" strategy.

— HODL15Capital (@HODL15Capital) May 29, 2024

Notably, Grayscale has expressed its intention to launch a clone of its main fund, which is expected to have lower fees, according to a March regulatory filing.

The Securities and Exchange Commission (SEC) approved the first US spot-Bitcoin ETFs in January following a court reversal in 2023 in a case brought by Grayscale.

Grayscale had originally created the Grayscale Bitcoin Trust in 2013, which became widely recognized as the largest vehicle of its kind.

However, trading of shares in the closed-ended product often deviated significantly from its net asset value, prompting Grayscale’s push for conversion into an ETF to ensure trading at par.

Bitcoin ETFs Among Most Successful Funds in History

The group of Bitcoin funds, with a total of $58.5 billion in assets to date, has been hailed as one of the most successful new categories of ETFs.

However, critics argue that volatile digital assets may not be suitable for widespread adoption, even within the structure of ETFs.

Some countries, such as Singapore and China, have restricted or banned investor access to cryptocurrencies.

Vanguard Group, the world’s second-largest asset manager, stated in January that it has no plans to offer any crypto-related products.

Bitcoin’s value has quadrupled since the beginning of last year, driven in part by the introduction of ETFs, marking a strong recovery from the deep bear market experienced in 2022.

Last week, the SEC also signaled its willingness to allow ETFs for Ether, the second-largest cryptocurrency by market value.

On May 23, the SEC officially approved 19b-4 applications from VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise for issuing spot Ether ETFs.

Notably, several ETF issuers removed staking from their final amendments.

As reported, analysis firm Kaiko has said that Grayscale’s forthcoming spot Ethereum ETF may face significant outflows, potentially averaging around $110 million per day.

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