Bitcoin drops to lowest level since approval of ETFs

In total, about $US880 million have flowed into Fidelity’s fund. BlackRock and Fidelity have driven early consolidation in the new asset, with the two firms receiving 68 per cent of all inflows across the nine new ETFs on the market, totaling nearly $US2 billion.

A significant portion of inflows are coming from investors leaving Grayscale Investment’s GBTC fund, according to Bloomberg Intelligence. Grayscale’s Bitcoin Trust, which was created in 2013, had over $US28 billion in assets under management when it converted to an ETF, but has seen about $US1.6 billion in outflows since trading started.

“Another unique kink is the GBTC situation,” said Michael Safai, founding partner at quantitative trading firm Dexterity Capital. “Many investors wanted to wait for the Grayscale discount to collapse prior to exiting their positions. Now that the discount is virtually gone, some newly liberated traders may have sold and are waiting to get back into ETFs soon.”

Grayscale’s Bitcoin ETF has a sector-high management fee of 1.5 per cent. Management fees at BlackRock and Fidelity are a fraction of GBTC’s cost, but they do not have the lowest fees in the group of new bitcoin ETFs — that title goes to Franklin Templeton with its 0.19 per cent management fee. Despite its industry-low fee, Franklin has received less than 2 per cent of inflows across the broader Bitcoin ETF group.

Bloomberg