May 6, 2024

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Grayscale's Bitcoin ETF Records First Inflow After Billions Lost Since January

The Grayscale Bitcoin Trust (GBTC) witnessed a net inflow of $63 million on Friday, marking its first daily increase since its conversion into an ETF in January, according to Farside Investors. This inflow ends a streak of net withdrawals from GBTC, which had seen significant outflows due to higher fees compared to its rivals. GBTC, historically a dominant choice for investors seeking exposure to Bitcoin without directly buying the cryptocurrency, faced competition from nine rival spot Bitcoin ETFs launched in January. As a result, its assets dropped from over 600,000 Bitcoin to around 290,000 Bitcoin. Despite this, GBTC retains its position as the largest Bitcoin ETF by assets with $18.1 billion, closely followed by BlackRock's iShares Bitcoin Trust (IBIT) at $16.9 billion. IBIT, launched in January with no prior assets, is rapidly challenging GBTC's dominance in the Bitcoin ETF space.

Institutional Holdings in Bitcoin ETFs Revealed Through SEC Filings

Institutions are steadily disclosing their holdings in Bitcoin ETFs through 13F filings, providing insights into institutional interest in these assets. These filings, ongoing until mid-May, are mandated quarterly disclosures for institutions managing $100 million or more. Notable disclosures include BNY Mellon holding nearly 20,000 shares of IBIT and around 7,000 shares of GBTC, while BNP Paribas holds about 1,000 shares of IBIT. Smaller firms like Quattro Advisors and Legacy Wealth Management have larger holdings in various ETFs. Yong Rong stands out as a major IBIT holder with over a million shares of BlackRock's ETF. Other Hong Kong asset managers like Ovata have also entered the Bitcoin ETF market. Analysts suggest this quarter's filings are just the beginning, with potential for increased appetite from larger institutions as the filing deadline approaches.

Robinhood Reveals Wells Notice Concerning Its Crypto Operations

Robinhood's chief legal officer revealed that the company received a Wells notice from the SEC after years of trying to cooperate with the regulator for regulatory clarity, particularly regarding their U.S. crypto business. The notice relates to alleged violations of the Securities Exchange Act and could lead to various enforcement actions and penalties. Robinhood has cooperated with the SEC's investigation and believes that the assets on its platform are not securities. This disclosure follows similar actions against other crypto firms, including Uniswap. Robinhood has faced regulatory scrutiny in the past, including subpoenas related to its crypto products and settlements for misstatements about revenue sources.

Trading Desk Insights

Bitcoin has seen a significant rally since the release of last Friday's non-farm payroll data in the U.S., which has been generally supportive of risk assets, including cryptocurrencies. Despite this rebound, it's important to note that Bitcoin prices are still below their 50-day moving average, indicating ongoing market pressures. For a definitive return to bullish territory, Bitcoin would need to consistently exceed the $66,000 to $67,000 range.

In related news, U.S.-listed spot ETFs experienced their most substantial single-day inflow in over a week, pulling in $378.3 million, signaling a shift toward more positive market sentiment following Bitcoin's recovery. Notably, Grayscale's Bitcoin ETF recorded its first daily inflow after a prolonged period of asset outflows, with investors injecting $63 million on Friday. This marks a significant turnaround for the Grayscale Bitcoin Trust (GBTC), the largest Bitcoin ETF by assets, which had seen daily outflows for nearly four months following its conversion to a spot ETF structure in January.

In other developments, a recent analysis by Visa and Allium Labs of April's stablecoin transactions, totaling about $2.2 trillion, found that only $149 billion stemmed from genuine payment activities, excluding transactions by bots and large-scale traders to focus on real user activity.

On the stock market front, U.S. futures climbed Monday, as Wall Street aimed to extend its gains from the previous session. This positive momentum comes after the latest non-farm payrolls data revealed a lower-than-expected increase in jobs and a rise in unemployment in April, alleviating concerns over an overheating economy and fueling trader optimism that the Federal Reserve might begin rate cuts earlier this year.

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