Bitcoin ETFs just had their first week of trading. Here’s who’s winning and losing.

“We are excited to see the strong early demand from clients for IBIT, especially within both the end-investor and advisor communities,” said Jay Jacobs, BlackRock’s U.S. head of thematic and active equity ETFs, in an emailed comment.

The Fidelity Wise Origin Bitcoin Fund
FBTC
has the next-largest inflows among spot bitcoin ETFs as of Jan. 18, garnering more than $600 million, according to CFRA data. But the Grayscale Bitcoin Trust ETF
GBTC
has the most assets under management by far, at around $23.7 billion as of Jan. 18, after converting into an ETF from an already large fund, Ullal observed.

“Grayscale has seen some outflows,” said Ullal, “but they’re actually not that bad considering the size of the fund.” 

After the Securities and Exchange Commission approved 11 spot bitcoin ETFs, it was “a very unusual situation” to see 10 of those funds all launch on the same day with the same underlying asset, Ullal said. The funds are “practically identical.”

Read: Spot bitcoin ETF ticker symbols are live. Here’s what investors are looking for after SEC approval.

Of the 11 bitcoin ETFs approved by the SEC, two of them — the Grayscale Bitcoin Trust ETF and the Hashdex Bitcoin Futures ETF
DEFI
— were conversions from existing funds, Ullal noted. The Hashdex fund has yet to convert into a spot bitcoin ETF, he said.

Ullal looked at the top 10 crypto exchange-traded funds in the U.S. by assets, including those that provide exposure to spot bitcoin
BTCUSD,
+0.02%
prices as well as futures contracts.

Ullal said that he expects that the “excitement around the initial launch” of the new spot bitcoin ETFs will be followed by a “longer grind” of building up assets over time. While “the smaller funds could face some pressure,” he said that he’d be “surprised” to see one close down in the first year.

“They all started with some seed capital,” said Ullal.

AllianceBernstein analysts Gautam Chhugani and Mahika Sapra wrote in a recent note that “whichever way we look at this, it confirms our view that bitcoin spot ETFs are off to a flying start.”

The 10 spot bitcoin ETFs have seen total trading volumes of $16.6 billion in their first six trading days as of Friday, according to FactSet and Dow Jones Market Data.

GBTC outflows

Meanwhile, investors are weighing the costs of the new bitcoin ETFs and some traders may have already reaped profits from Grayscale’s fund.

JPMorgan Chase & Co. analysts led by Nikolaos Panigirtzoglou said in a Jan. 11 research note that they were expecting around $3 billion to exit GBTC, due to investors taking profits after buying “deeply discounted” shares in the secondary market over the past year.

GBTC was launched in 2013 as a private, open-ended trust for accredited investors and began trading publicly in 2015. While the trust initially traded at a premium to its net asset value, or the value of the bitcoin it holds, it flipped to a discount in 2021. 

The discount didn’t disappear until the SEC finally approved Grayscale’s application to convert the fund into an ETF. Compared with close-ended funds, ETFs have a unique structure that allows certain financial institutions, known as authorized participants, to create and redeem shares, to keep the funds’ value aligned with that of the assets they hold. 

Now, as GBTC trades as an ETF, “those early investors finally have an opportunity to cash in,” according to a note Friday from James Harte, analyst at TickMill Group.

The JPMorgan analysts were anticipating that Grayscale’s higher management fees could lead to additional outflows from GBTC of potentially $5 billion to $10 billion as investors seek cheaper alternatives, according to their note.

GBTC charges a management fee as high as 1.5%, while most other bitcoin ETFs have fees that range from 0.2% to 0.4%.

But Grayscale Investments Chief Executive Michael Sonnenshein has defended GBTC’s higher fees, noting that it is the largest bitcoin fund, has a multi-year track record and a diversified investor base, according to a CNBC report on Friday.

“Investors are weighing heavily things like liquidity and track record and who the actual issuer is behind the product,” Sonnenshein told CNBC at the World Economic Forum in Davos. “Grayscale is a crypto specialist. And it has really paved the way for a lot of these products coming through.”

Sonnenshein told CNBC that other bitcoin ETFs don’t have a track record and that issuers are using lower fees as an incentive to lure investors.

Grayscale’s spot bitcoin ETF gained 2% on Friday, FactSet data show. Bitcoin rose 0.5% over the preceding 24 hours to around $41,500 on Friday evening, according to CoinDesk data.

“GBTC has seen a big drop in funds, with money coming out of that. And the inflows into BlackRock and Fidelity are kind of compensating for that,” said Akbar Thobhani, chief executive at sFOX, in a phone interview with MarketWatch. “So you do see a shift in capital going from one to the other.”