The Barometer of the Crypto Assets Field: From Clear Whale to Sell Pressure Source

In the Crypto Assets industry, Grayscale has always been an important institution that attracts attention. As a subsidiary of Digital Currency Group (DCG), Grayscale has provided compliant Crypto Assets investment channels for investors through trust funds for many years, with its client base mainly consisting of institutional investors and retirement funds.

However, with the changes in the market environment, Grayscale's role is also shifting. On January 11, after Grayscale's GBTC trust successfully converted to a spot Bitcoin ETF, it began to trigger sustained selling pressure on BTC. Data shows that as of recently, GBTC has accumulated an outflow of $3.45 billion, becoming the main factor for the overall capital outflow of Bitcoin ETFs.

Looking back at Grayscale's development, it has been a significant institution in the crypto field since 2019. Before the listing of the spot Bitcoin ETF, Grayscale provided compliant investment channels for investors through its trust fund. On January 11 of this year, when GBTC transitioned to an ETF, its management scale reached as high as $25 billion, making it one of the largest Crypto Assets custody institutions.

Grayscale's portfolio also includes mainstream assets and established coins such as ETH, BCH, and LTC, demonstrating its robust investment preference. These trust funds are essentially "naked long trusts," entering the market without exiting in the short term, and have therefore been regarded as an important force driving the bull market.

In 2020, against the backdrop of Bitcoin ETF applications being delayed for approval, Grayscale became one of the main channels for investors to enter the Crypto Assets market. It effectively served as an intermediary channel for qualified investors and institutions to engage in the Crypto Assets market, facilitating the direct entry of incremental OTC funds.

However, with the approval of the spot Bitcoin ETF, the negative premium issue of GBTC has begun to gradually ease. From about 30% in July 2023, the negative premium of GBTC has narrowed to nearly zero. This is an opportunity for early investors to take profits, but it also means that a new market landscape is forming.

Currently, GBTC has become a major source of selling pressure in the ETF market. As of recent, GBTC experienced a single-day outflow of over $640 million, setting a record for the largest single-day capital outflow since its conversion to an ETF. In contrast, the other 10 ETFs are still in a net inflow state. This indicates that the incremental funds brought by the ETF are currently still being used to hedge against the ongoing capital outflow from GBTC.

One important reason for the outflow of funds from GBTC is its high management fee. The 1.5% management fee of GBTC is much higher than the fee levels of other ETF products, which range from 0.2% to 0.9%, which may lead investors to choose lower-cost alternatives.

Looking ahead, GBTC still holds over 500,000 BTC (approximately $20 billion), which means that there may be a clear game of strategy in the coming period. Institutional investors and funds may wait for the right opportunity to gradually eat into GBTC's market share.

In this special market cycle, the crypto industry is experiencing a shift from reliance on large institutions to a more diversified approach. Institutions that were once seen as the "engine of the bull market" may now become potential risk factors. For the entire industry, breaking the obsession with Whale arrangements and reassessing the role of institutions may be one of the most valuable experiences at this stage.