Bitcoin is at an all-time high, but lacks enthusiasm. Will we have to wait until the GBTC ETF is empty to go higher?
Bitcoin, best start to the year since 2013
Bitcoin appreciated 67% during the first quarter, mainly thanks to ETFs introduced in January. We could have even reached $100,000 if the party had not been partly spoiled by the exits of the old GBTC Trust…
Despite this strange anomaly, bitcoin is back at its all-time high and the BlackRock ETF is already the most popular in history. The dubbing of the largest investment fund in the world has brought together the hesitant who were waiting for more regulatory clarity.
The following chart shows a clear correlation between the inflow of money into ETFs and the price of bitcoin:
All ETFs are failing except the GBTC ETF which is losing customers due to its exorbitant management fees. However, customer reimbursements trigger the sale of bitcoins held in the ETF. Hence the timid rise of bitcoin.
Fortunately, the massive outflows from the GBTC ETF ($15 billion) are more than offset by the nine new ETFs that have already attracted $27 billion. In other words, all ETFs absorbed $12 billion in net inflows during the first quarter.
All eyes remain on the GBTC ETF which now only holds 320,000 bitcoins, almost half as many as in January. The reason, as we have said, is management fees (1.5%) six times higher than those of the competition.
NYDIG estimates that $5 billion left the GBTC ETF following the resolution of the Genesis and FTX bankruptcies. Which means $10.1 billion was lost because of unhappy customers.
The GBTC ETF only has $23 billion under management, compared to BlackRock's already $19 billion.
What does Grayscale play?
If Grayscale does nothing, its GBTC ETF will lose its leading position to BlackRock very soon.
However, its CEO Sonnenshein has been promising for more than a year to lower management fees without ever taking action…
“I will happily confirm that over time, as this market matures, fees will decrease”he declared on March 19 on CNBC.
“I don’t think the 11 ETFs will survive. There will be consolidation and they all know it, that’s why the fees are at the floor”he said earlier this year.
Grayscale therefore seems to be waiting for things to settle down, perhaps banking on the fact that it is the survivors who will ultimately match its costs.
Especially since Grayscale remains a winner as long as it holds at least 103,000 BTC. In fact, a 1.5% fee on 103,000 BTC equals a 0.25% fee on 620,000 BTC!
For the moment, BlackRock and Fidelity take the lion's share. ARK and Bitwise took 4th and 5th places, managing to beat out well-established players like VanEck, Invesco and Franklin Templeton.
We will see if this strategy will pay off. Just yesterday, the GBTC ETF sold the equivalent of $300 million worth of bitcoin. At this rate, the ETF will be empty within three months…
The Halving
The next halving will take place on April 19 or 20. This is another important event since the rate of bitcoin creation will increase from 6.25 to 3,125 BTC every ten minutes. Daily production will increase from 900 to 450 bitcoins, or $32 million at the current price ($70,000).
NYDIG estimates that the impact on price will be relatively limited. Thirty million dollars is only a small portion of global trading volumes of billions of dollars per day.
The halving should not, however, go unnoticed by gold holders. They will not be able to hide their faces for long in the face of the S2F (Stock to Flow) ratio of bitcoin which will suddenly be twice as high as that of their yellow metal. As we wrote previously:
“Given that the global gold stock is around 180,000 tonnes, the 3,000 tonnes mined each year gives us an S2F ratio of 60 (180,000 / 3,000). That is to say, it takes 60 years of production to double the existing stock.
Bitcoin sports a slightly lower ratio, for the moment… Everything will be turned upside down from April 20. Bitcoin's S2F ratio will explode to 120, officially becoming twice as difficult to create as gold. This ratio will exceed 1000 in 2035, when 99% of bitcoins will already be in circulation. »
Halving cannot in itself cause a rise in bitcoin. But it will certainly have a psychological effect capable of causing large reallocations of funds.
All this to say that investors really have reason to be optimistic about the coming decade.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
