Cash is flowing from high-profile cryptocurrency funds following the launch of spot bitcoin exchange-traded funds (ETFs) earlier this month, according to a new report.
Digital asset fund manager CoinShares said Monday that investors withdrew $21 million from crypto fund issuers last week.
The report noted that since the long-awaited Bitcoin exchange-traded funds began trading on January 11, $2.9 billion has been withdrawn from top funds such as Grayscale, CoinShares, and 21Shares.
CoinShares said short Bitcoin products — which bet on the price of cryptocurrencies falling — received cash. Other altcoin funds that give investors exposure to Ethereum and Solana lost a total of $22.5 million, she added.
Instead, CoinShares said, investors wanting exposure to digital assets are putting their money into new Bitcoin ETFs.
“High-cost existing issuers in the US have suffered, seeing $2.9 billion in outflows, while newly issued ETFs have now seen a total of $4.13 billion in inflows since their launch.” The report said.
On January 10, the US Securities and Exchange Commission approved Bitcoin exchange-traded funds after a decade of rejecting applications for the product.
The Bitcoin Spot ETF gives investors exposure to the largest cryptocurrency by market cap by allowing people to buy shares that track the price of the asset.
Prominent Wall Street firms, such as BlackRock and VanEck, have applied to launch their own cryptocurrency investment vehicle and received the green light this month — to bring Bitcoin to mainstream investors.
Of the 10 ETFs being traded, BlackRock’s iShares Bitcoin Trust is the best performer, CoinShares data shows. The fund now has $1.3 billion in assets under management.
Meanwhile, cryptocurrency fund manager Grayscale dominated outflows. Grayscale’s Bitcoin Trust (GBTC) was recently converted into a Bitcoin ETF and investors are cashing out quickly.
Previously, the fund operated as a closed-end fund where investors were unable to redeem their shares during a 6-month lock-up period. Since converting to an ETF, investors have withdrawn more than $2.2 billion, CoinShares said.
Edited by Stacey Elliott.