"What Happened to Bitcoin ETF?" Newsletter: Grayscale Bitcoin Mini ETF Overtakes BlackRock’s IBIT with $191 Million Inflows

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Welcome to "What Happened to Bitcoin ETF?”

In this week's edition, we will cover the key highlights from July 29th to August 2nd. We provide a concise and engaging analysis of the Bitcoin ETF market and review the overall performance of the Bitcoin market during this period.

Weekly Bitcoin ETF in Numbers

• Total AUM of Bitcoin ETFs (as of August 2nd):

  $55,520,434,003 (Last week: $62,074,786,583)

  ₿883,996 (Last week: ₿914,785)

• Total Weekly Net Flow (July 29th~August 2nd):

  -$6,558,829,840 (Last week: +$1,531,417,861)

  -₿30,789 (Last week: +₿8,837)

• Top Weekly Performer:

  BlackRock (IBIT): +₿5,600

• Worst Weekly Performer:

  Grayscale (GBTC): -₿30,449

1/ Total AUM and Bitcoin Price Dynamics:

Weekly AUM Overview:

As of the latest report, the US Bitcoin spot ETF total AUM has decreased, with the total now at 883,996 BTC. In USD terms, the total AUM is $55.5 billion, down from $62.1 billion last week. This decline in the Bitcoin ETF market reflects recent challenges in the broader financial markets.

The total Bitcoin held by US Bitcoin ETFs now constitutes 4.55% of the total Bitcoin supply, down from 4.68% previously.

Recent performance highlights include BlackRock’s IBIT fund gaining 5,600 BTC, making it the top weekly performer. Conversely, Grayscale’s GBTC fund experienced a substantial outflow of 30,449 BTC, marking it as the worst performer of the week.

Significant weekly net outflows of $1.55 billion (₿30,449) from Bitcoin ETFs underscore the caution among investors amid the current market volatility.

Bitcoin price has been volatile, with a notable decline of 16% from yesterday (August 4th, Sunday), now trading at approximately $52,000. This drop follows a high of $50,000 earlier today, demonstrating the impact of broader market conditions, including fears of a US recession and heightened geopolitical tensions in the Middle East.

The broader financial markets are currently experiencing severe instability, with risk assets, including Bitcoin, under pressure. The KOSPI index fell by 15%, triggering a sidecar, and Ethereum also dropped by 23%, trading at $2,300, erasing its gains for the year.

Largest Weekly Drop Since FTX Collapse:

Bitcoin Drops 16% in a Day: “Focus on Price Movements Post-September Rate Cut”

The price of Bitcoin (BTC) plummeted by over 16% in just one day. Ethereum (ETH) also saw a drop of over 20%, signaling a widespread downturn in the cryptocurrency market.

As of August 5th, according to CoinMarketCap, BTC was down 16.14% from the previous day, trading at $50,737.74. During the same period, ETH fell 23.67%, trading at $2,221.85. Other altcoins also faced significant declines: Binance Coin (BNB) dropped 21.45%, Ripple (XRP) fell 18.10%, and Dogecoin (DOGE) decreased by 20.81%.

This downturn is attributed to growing concerns over a US recession, leading to an increased preference for safe assets and impacting risk assets like cryptocurrencies. Reports indicate that the likelihood of a US recession and rising geopolitical concerns have led to a strong sell-off in BTC along with other risk assets, including global stocks. The US July employment report, released on August 2nd, showed an unemployment rate of 4.3%, the highest in nearly three years, amplifying recession fears. Geopolitical tensions in the Middle East have also contributed to market anxiety.

Analysts suggest that this price drop highlights the risky nature of BTC and other cryptocurrencies, with BTC being one of the riskiest. BTC has hit its lowest point since late February this year. If BTC fails to hold the $53,000 level, it could fall further to $48,000.

Market experts also indicate that the price movements of BTC following the expected September rate cut by the Federal Reserve could indicate future trends. If BTC rebounds after the rate cut, it could mirror the positive market response seen in 2019, when the cessation of rate hikes led to overall asset price increases. Conversely, if recession fears intensify, a more significant downturn could ensue. The Federal Reserve’s potential rate cut could be interpreted as confirmation of an impending recession, potentially driving BTC prices lower.

2/ Bitcoin ETF Weekly Flow:

Ending Holdings on August 2 (WoW Change):

• IBIT (BlackRock): 344,070 BTC (+5,600 BTC)

• GBTC (Grayscale): 240,140 BTC (-30,449 BTC)

• FBTC (Fidelity): 178,054 BTC (-3,073 BTC)

• ARKB (Ark 21Shares): 47,280 BTC (-1,943 BTC)

• BITB (Bitwise): 37,988 BTC (-1,204 BTC)

• HODL (VanEck): 11,171 BTC (+141 BTC)

• BRRR (Valkyrie): 8,877 BTC (+0 BTC)

• BTCO (Invesco Galaxy): 8,076 BTC (+168 BTC)

• EZBC (Franklin Templeton): 6,844 BTC (+0 BTC)

• BTCW (WisdomTree): 1,317 BTC (-30 BTC)

• DEFI (Hashdex): 178 BTC (+0 BTC)

Total: 883,996 BTC (-30,789 BTC)

The 12 spot bitcoin exchange-traded funds (ETFs) in the US experienced their largest single-day outflow on Friday, August 2, since May 1. The total outflow amounted to $237.45 million, marking the fourth highest single-day outflow since the launch of these ETFs in January, according to SoSoValue data.

Despite significant inflows for Grayscale’s Bitcoin Mini Trust ($9.88 million) and BlackRock’s IBIT ($43 million), these gains were overshadowed by substantial outflows from several major funds:

• Fidelity’s FBTC: over $100 million

• Ark Invest and 21Shares’ ARKB: about $81 million

• Grayscale’s GBTC, Bitwise’s BITB, and VanEck’s HODL: under $50 million each

The remaining five funds saw no change in their asset levels.

While the single-day outflow was significant, the total trading volume was not unusual, and the combined net asset value of all bitcoin ETFs remains near historical highs. However, this comes amid a continuing decline in bitcoin’s price, now approaching the $60,000 mark.

3/ Looking Ahead:

Morgan Stanley Breaks Ground with Bitcoin ETF Offerings:

In a significant move for the adoption of bitcoin by mainstream finance, Morgan Stanley announced that starting August 7, it will allow its financial advisors to offer bitcoin ETFs to eligible clients. This marks the first instance of a major Wall Street bank permitting such activity. Morgan Stanley’s 15,000 financial advisors can solicit clients with a net worth of at least $1.5 million who exhibit an aggressive risk tolerance and are open to speculative investments. The two exchange-traded bitcoin funds available for client purchase are BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund. These investments are restricted to taxable brokerage accounts and are not available for retirement accounts. The bank will closely monitor clients’ crypto holdings to prevent excessive exposure to the volatile asset class.

This development is a response to growing client demand and reflects the evolving marketplace for digital assets. It underscores the increasing acceptance of bitcoin ETFs as viable investment vehicles, easier to access, cheaper to own, and more readily traded. Despite past market sell-offs and the collapse of major crypto exchanges like FTX, bitcoin has maintained investor interest.

Morgan Stanley’s move is expected to spur further adoption of bitcoin ETFs among mainstream investors and wealth management firms. Other major banks such as Goldman Sachs, JPMorgan, Bank of America, and Wells Fargo have yet to follow suit, adhering to a more conservative approach by only allowing trades if clients actively seek out bitcoin ETFs. The firm is also monitoring the market for newly approved ether ETFs, indicating potential future offerings depending on market developments. As the market continues to adapt, the actions of major financial institutions like Morgan Stanley will be critical in shaping the future landscape of bitcoin ETFs and digital asset investments. Investors should watch closely for further regulatory approvals and market reactions in the coming weeks.

4/ 🔥What’s Trending Now?:

Grayscale Bitcoin Mini ETF Overtakes BlackRock’s IBIT with $191 Million Inflows

The launch of Grayscale’s Bitcoin Mini ETF has shaken up the market, drawing $191 million in inflows within its first two days. This surge significantly outpaced BlackRock’s IBIT, which saw $26 million. Grayscale’s new ETF offers a competitive advantage with lower fees (15 bps) compared to its flagship GBTC product (150 bps). Consequently, GBTC experienced $71.3 million in outflows. Other major Bitcoin ETFs like Fidelity’s FBTC, Bitwise’s BITB, and ARK’s ARKB also saw zero inflows this week, highlighting the intense competition Grayscale has introduced.

5/ This Week’s Bitcoin Mindset:

Bitcoin is Fine Too

It’s Time to BTFD!

🍫CRYPTO CRUMBS ON THE TRAIL 🍫

Dive into this week's crunchy bites of important news, serving up the freshest updates and insights from the crypto world.

Here's what's on the menu:

1. Crypto selloff wipes out $270 billion in value as bitcoin, ether plunge

   Bitcoin and ethereum suffered steep drops on Sunday as investors sold out of risky assets.

2. Analyst Benjamin Cowen Issues Warning, Says It’s Time for Altcoins To Collapse Against Bitcoin

   A closely followed crypto strategist thinks altcoins are about to witness a market meltdown against Bitcoin (BTC).

3. Donald Trump’s Plan to Hoard Billions in Bitcoin Has Economists Stumped

   The former US president has promised to establish a "national bitcoin stockpile" if he's reelected and use it to offset inflation.

4. Morgan Stanley tells wealth advisors they can pitch bitcoin ETFs in a first for a big bank

   The move from Morgan Stanley, one of the world's largest wealth management firms, is the latest sign of the adoption of bitcoin by...

5. Bitcoin drops below $50,000 for the first time since February

   Cryptocurrencies tumbled amid a global market sell-off spurred by recession fears. The price of bitcoin sank more than 13% on Monday to...

That’s it for today; stay tuned for more updates and insights in our next edition!

Stay charged,

SmashFi Team

P.S. - Follow me on X (@brianhoonjong) for daily doses of insightful updates on Bitcoin ETFs and beyond! 🚀🐦

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Disclaimer: This newsletter is for the brainy and the brave. It's for informational purposes only and not a substitute for investment advice. Always do your own research.