Grayscale Holdings Plummet, Bitcoin ETF Wars Ensue

NAIROBI ( – Grayscale Bitcoin Trust (GBTC), the world’s largest Bitcoin fund, has seen its holdings plummet by 50%, a loss of approximately $20 billion at current Bitcoin prices. Certainly, this significant decline in GBTC’s holdings suggests an erosion of investor confidence in the fund.

Grayscale Holdings
Estimated Grayscale GBTC balance. Source Glassnode

Simultaneously, crypto analyst Charles Edwards predicts that the Blackrock Bitcoin ETF’s holdings could potentially overtake the Grayscale holdings before the highly anticipated Bitcoin halving event, further intensifying the competitive landscape.

Investor Interest in Bitcoin ETFs Wanes

Ki Young Ju, CEO of CryptoQuant, noted a slowdown in net inflows for Bitcoin spot ETFs. However, Ki Young Ju highlights that demand could see a resurgence if Bitcoin’s price approaches critical support levels. New institutional investors, primarily from the ETF market, entered Bitcoin at an on-chain cost basis of $56,000. In bull markets, historic corrections tend to have a maximum drawdown of around 30%, suggesting a potential pain point for investors at $51,000.

Bitcoin spot ETFs
Ki Young Ju screenshot on X

The decline in Grayscale’s Bitcoin ETF holdings points towards waning enthusiasm for the flagship cryptocurrency fund. Several factors could be contributing to this change. One possibility is that investors are becoming increasingly dissatisfied with Grayscale’s relatively high management fees. Additionally, the persistent discount at which GBTC trades compared to its net asset value (NAV) might be deterring new investors.

The rise of Blackrock, along with other major asset managers entering the Bitcoin ETF space, offers investors alternative options with potentially more attractive fee structures. The changing competitive landscape, coupled with broader market conditions, could be pushing investors away from Grayscale’s Bitcoin ETF and toward other avenues for gaining exposure to Bitcoin.

Bitcoin CDD Indicators Signal Shift

Bitcoin is currently priced at $66,402.56, reflecting a 2.27% decrease over the past week. While the short-term trend is downward, it’s important to consider this within the context of Bitcoin’s historical volatility. Above all, long-term investors typically focus on fundamentals and may not be swayed by short-term price fluctuations.

Data from CryptoQuant analyst Yonsei_dent reveals interesting trends in Bitcoin’s Coin Days Destroyed (CDD) indicators over the past six months. The CDD metric measures “old” coins being moved, suggesting that long-term holders are becoming more active.

Binary CDD charts. Source CryptoQuant

Notably, both the Binary CDD and Supply-adjusted CDD indicators have been gradually increasing. This signals a potential transition of BTC from long-term holders (LTHs) to short-term holders (STHs), even as Bitcoin’s price has increased roughly 186% during that same period.

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