In brief

  • A new report shows Bitcoin is flowing out of crypto ETFs.
  • The report concludes that this is because big investors are losing interest.
  • But a crypto ETF CEO thinks differently.

Institutional demand for cryptocurrency—which was partly behind Bitcoin's phenomenal run—is slowing down, according to new findings from blockchain analytics company, Glassnode.

The firm said today in a report that institutional investors (big organizations that have lots of money to throw around) are losing interest in the biggest cryptocurrency by market cap. Proof of this can be found by looking at the Grayscale Bitcoin Trust (GBTC), the report noted. 

GBTC, a popular investment product which allows investors to trade shares in trusts holding large pools of Bitcoin, is now constantly trading at a persistent discount to net asset value (NAV), Glassnode said. What that means is that shares in Grayscale’s Bitcoin Trust are now less expensive to buy that Bitcoin itself. But this wasn’t the case until recently; for years, investors paid a premium to buy into GBTC.


“A primary driver for Bitcoin price appreciation in 2020 and 2021 was both the narrative, and the reality of institutional demand,” the report read. “One of the largest factors in this was the one-way flow of coins into Grayscale's GBTC trust fund as traders sought to arbitrage the high premium observed in 2020 and early 2021.”

“Since Feb 2021, the GBTC product has reversed to trade at a persistent discount to NAV, hitting the deepest discount of -21.23% in mid-May,” it added. 

The report went on to add that the combined amount of Bitcoin for two popular exchange-traded funds (ETFs)—Purpose and 3iQ—has decreased. Currently, the combined net flows for both ETFs over the last month shows that a total of 8,037 BTC has flowed out of the products.

3iQ’s holdings have declined by 10,483 BTC (over $381 million at today’s prices), the report said. 

Cause for concern? Not according to the 3iQ CEO, Fred Pye, who told Decrypt that it was simply a sign of successful investors cashing out their gains. 


“There is no slowing down at all,” the CEO of Toronto-based ETF said, adding that his firm had met with hundreds of potential clients in the past two weeks alone. 

“The request we’re getting is still real and significant,” he continued. The outflow, according to Pye, was investors cashing out who had already made profits. 

The 3iQ ETF is one of North America’s only crypto ETFs. An ETF is an investment product that tracks the price of an asset—in this case, Bitcoin. Investors can buy shares that represent the asset. 

While the U.S. still awaits a crypto ETF, Canada has approved several. 3iQ, Canada’s first crypto ETF, launched on the Toronto Stock Exchange last April. 

Glassnode added that coin balance on Coinbase, the biggest crypto exchange in the U.S., had remained stagnant. Previously, the San Francisco-based exchange was pumping out Bitcoin as it was the preferred way for institutions to buy the coin—a sign of demand. But since December, the balance has been flat.  

“Between observations of the GBTC premium, net outflows from the combined Purpose and QBTC ETFs, and a stagnant Coinbase balance, institutional demand appears to remain somewhat lacklustre,” the report concluded.


The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

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