Title: Grayscale Bitcoin Trust Sees $1.9 Billion Outflows as U.S. Bitcoin ETFs Report Net Outflows

In a recent report by BitMEX Research, it has been revealed that Grayscale Bitcoin Trust recorded $1.9 billion in outflows last week, leading to net outflows for the group of U.S. spot bitcoin exchange-traded funds (ETFs) for the week ending March 22. Despite buying interest from major players like BlackRock and Fidelity Investments, the selling by Grayscale holders outweighed the inflows, according to the data.

The influx of capital into the other nine ETFs that were launched concurrently with Grayscale's fund also slowed down last week. This decline is attributed to the relatively muted price of bitcoin compared to its previous highs earlier this month.

One of the major factors contributing to Grayscale's outflows is the significantly higher management fee compared to its competitors. Grayscale opted to keep the fee on its converted ETF at 1.5%, while BlackRock's fund charges only 0.25%. Furthermore, rivals' fees are even lower, including fee waivers.

Additionally, analysts have noted that the outflows from Grayscale were partially driven by the selling activities of bankruptcy trustees. These trustees were liquidating bitcoin holdings to fulfill obligations to creditors of FTX and other entities.

Bryan Armour, an ETF analyst at Morningstar, commented on the situation, stating that Grayscale intends to gradually reduce the fees on its flagship fund in the future. A spokesperson for Grayscale acknowledged that strategies like profit-taking, arbitrage, and selling by bankruptcy trustees were anticipated to result in net outflows.

In stark contrast to Grayscale's outflows, BlackRock's iShares Bitcoin Trust has experienced significant growth, with assets reaching $10 billion on March 1, as reported by Morningstar and TrackInsight. Last week, the fund saw inflows totaling $828.3 million, albeit lower than the $2.48 billion recorded in the previous week.

Grayscale has faced additional challenges recently, with wealth management provider Wealthfront announcing its decision to replace Grayscale's ETF with BlackRock's iShares fund. Citing lower fees and higher average daily trading volumes, Alex Michalka, Vice President of Investment Research at Wealthfront, stated that the iShares fund was deemed more attractive.

Bitcoin's price, which soared as much as 16% earlier this year, currently remains around 9% below its recent peak reached just two weeks ago. The performance of the ETFs has mirrored this price action, with profit-taking and a lull in buying occurring when an asset reaches all-time highs.

According to industry experts, the revival of bitcoin ETF flows may depend not only on a more stable price but also on increased interest from institutional investors. Currently, most trading activity is dominated by individual investors and a few hedge funds, with institutional involvement being relatively limited. VanEck, which also has its own bitcoin ETF competing for a share of the inflows, highlights the need for more institutional interest.

As market dynamics continue to evolve, the performance and capital flows of bitcoin ETFs will be closely watched by investors and industry participants alike, as they gauge the cryptocurrency's future trajectory.

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