Bitcoin Spot ETFs: a lookback

I can't believe Bitcoin spot ETFs have been active for 7 weeks already! For those who have been in the space for a long time, this has been in the works for the past decade, when the Winklevoss Twins filed for the first spot ETF application (subsequently rejected).

There has been a lot of talk around the trading volume and inflows of these spot ETFs, but I thought I'd take a look at how they are affecting the supply of Bitcoin. So the data and charts below will revolve around how much Bitcoin these funds are buying or selling, not just the $ amounts flowing in and out.

Overview

On January 10th, the SEC approved 10 Bitcoin spot ETF applications to begin trading on the market. 9 of these ETFs were brand new products and started with from zero. The 10th ETF, from Grayscale, was a private trust with existing AuM that converted to an ETF.

​

SOURCE: Issuer websites

As you can see, Grayscale charges a whopping 1.5% AuM fee on their fund, while competitors are charging way less, with further reductions in the opening months to gain traction. In addition to their higher fee's, Grayscale's customers have been locked into the trust for a long period of time (the trust initially launched in 2013 for OTC only). So on January 10th, Grayscale's GBTC was made up of customers (including FTX, Genesis) who were far in-the-money, and they were charging them an elevated fee for the same product as their competitors.

Unsurprisingly, this has led to a sell-off of GBTC while the other funds have grown exponentially (see below)

​

SOURCE: BitcoinTreasuries.net

GBTC has lost an insane 30% of their Bitcoin over the last 7 weeks! Meanwhile the 9 other funds have been stacking like crazy:

​

SOURCE: BitcoinTreasuries.net

As of February 29th, these other 9 spot ETFs currently hold over 340k BTC, or about 2% of the total estimated circulating supply (~18M BTC). Over this 7 week period, approximately 44k BTC has been mined. While miners may hold their rewards before selling into the market, it is remarkable how these ETFs have essentially been eating up the new supply.

So how does the daily net flow activity look like? The below chart shows the daily net buying activity of BTC for all ETFs:

​

SOURCE: BitcoinTreasuries.net

We can see after the initial pump, Grayscale's selling action outweighed the buying action from the other 9 funds, however over the past month we have seen buying action beginning to normalize around 10k BTC daily.

So is the sell-off from Grayscale slowing down? The below chart shows only GBTC's net daily flow of BTC:

​

SOURCE: BitcoinTreasuries.net

​

The answer is yes - after a major sell-off in January, GBTC has also begun to normalize at selling ~3k BTC daily.

The nets to ~7k BTC being bought by spot ETFs on a daily basis, with mining supply equating 900.

​

Closing Thoughts

I don't expect this buy trend to continue, as wall street investors will certainly sell if/when Bitcoin's price skyrockets. That being said, there is still Trillions of dollars on the sidelines. Major RIAs like LPL Financial (~$1.5T AuM) are still conducting their due diligence, and major brokerages like BofA, Wells, and Vanguard are still not allowing small retail clients to buy these ETFs on their platforms. We have also yet to see the impact of these ETFs being added to other indexes, or being added to 401k's.

I never thought Bitcoin would eclipse $60k before the halving, yet here we are. It's hard to not get excited considering all the big money still on the sidelines - how long before these large wirehouse players get tired of watching their competitors make all that fee income before they decide to jump in?

​

TLDR; Bitcoin to the moon