Exchange-traded bitcoin investment vehicles now hold 4.3% of the circulating BTC supply, as per Arcane Research.
A steady amount of Bitcoin has been gobbled up from the market throughout the first quarter of 2021, as per the data shared by Vetle Lunde, an analyst at Arcane Research.
Exchange-traded bitcoin investment vehicles had just under 695k BTC under management at the end of last year, which has increased to 800,416 as of March 26th. This represents 4.3% of the circulating bitcoin supply.
During the same period, the price of Bitcoin went up more than 100%, from about $27,500 to $55,000.
These Bitcoin-related products added more than 40k BTC in the month of January. While only half of this was added in February, and about 43,692 BTC were added in March. Overall, this year, 100,000 BTC have been absorbed by Bitcoin funds.
Combined, the exchange-traded bitcoin investment vehicles manage $43 billion worth of bitcoin, noted Lunde.
The world’s largest digital asset manager, Grayscale Investments, is the leader in the space, accounting for 82% of the market, managing $36.5 billion worth of bitcoin.
GBTC, meanwhile, continues to trade at a discount, currently at 7.27%, ever since earlier this month.
“It’s a perpetual security, and it charges 2% mgt fee per year. So if duration is 7-10 years, a 15-20 percent discount to NAV makes sense. That’s also where many closed-end funds trade,” commented Mike Novogratz of Galaxy Digital, which also holds GBTC shares, on the discount.
According to Novogratz, GBTC used to be “the only game in town,” which has now changed with the launch of several Bitcoin exchange-traded funds (ETF) in Canada that too at a much lower fee.
“The ethos of crypto has always been about ‘transitioning’ to a world that eliminates the rent takers,” added Novogratz.
Arcane Research also noted that the three recent ETF approvals in Canada had pushed Grayscale’s dominance in the market on a decline. The combined AUM of the Purpose ETF, Evolve ETF, and Galaxy ETF has reached a market share of 2.5% in just a couple of weeks.
This is why the market is seeing fee compression. Recently, NYDIG cut its cost to 0.30% of net asset value per year.
“Trying to transition the fund to an ETF is difficult but elegant. My firm belief is the community won’t allow rent takers for too long,” said Novogratz adding, “GBTC provided a huge service to the crypto community and accelerated adoption.”