Written by Suzanne McGee
(Reuters) – Bitcoin continued to fall on Tuesday with record outflows from Grayscale's Bitcoin Trust, accelerating the fund's asset losses since converting to an exchange-traded fund this year.
On Monday, when Bitcoin fell about 4%, the Grayscale ETF hit a record single-day outflow of $642.5 million, according to data from BitMEX Research. The cryptocurrency fell another 2% by mid-afternoon on Tuesday, rebounding from session lows. Data for Tuesday's flows will be available Wednesday morning.
Investors have been unloading their holdings in the Grayscale fund since it was converted into an ETF on January 10th. Meanwhile, money is flowing into nine new spot Bitcoin ETFs approved by the U.S. Securities and Exchange Commission on the same day.
Monday's outflows from the Grayscale ETF brought the total since Jan. 10 to about $12 billion, but a 52% rise in Bitcoin's price has helped offset some of those losses. The fund currently has $27.2 billion in assets, compared to $29 billion on the new ETF's first day of trading.
“As the largest and currently most expensive Bitcoin ETF, profit taking and redemptions are natural,” said Todd Rosenbluth, head of research at market analysis firm Bettafi.
Grayscale said in a statement that it expects cash outflows will occur as shareholders arbitrage profits and liquidate their shares to repay creditors.
Grayscale CEO Michael Sonnenshein told CNBC that the company will lower the fund's fees “over time.” His current 1.5% fee is significantly higher than the fees charged by other ETF providers. Fees can be up to around 0.25%, but can often be reduced to zero with temporary waivers.
Most other Bitcoin funds saw subdued inflows or little net movement in assets. A lack of new purchases and grayscale outflows resulted in Monday's lowest single-day inflows for Bitcoin ETFs since late January.
“You don't see money flowing into these ETFs every day,” Rosenbluth said. “It's natural for people to take profit after a strong performance.”
(Reporting by Suzanne McGee; Editing by Ira Iosebashvili, William Maclean and David Gregorio)
