Grayscale's Cryptocurrency Holdings Fall Below $20 Billion as BTC and ETH Decline

Grayscale Investments' cryptocurrency holdings dropped below $20 billion, with Bitcoin (BTC) and Ethereum (ETH) accounting for over 99% of the portfolio. Falling asset prices and fund outflows drove the decline.

Grayscale's Holdings Drop Below $20 Billion

Investment company Grayscale Investments has seen its cryptocurrency reserves drop below $20 billion for the first time since March 2023, according to data from the Arkham platform. This decline started in mid-March 2024, with Grayscale's digital assets falling further to $19 billion by September 7, 2024.

Grayscale's portfolio is dominated by two major cryptocurrencies—Bitcoin (BTC) and Ethereum (ETH)—which comprise over 99% of the company’s total investment in digital assets.

BTC and ETH Fund Outflows Accelerate Grayscale’s Decline

The sharp drop in the value of cryptocurrencies held by Grayscale is not only attributed to the falling market prices of Bitcoin and Ethereum but also to significant fund outflows from the company’s ETFs. Between September 2 and 6, 2024, the Grayscale Bitcoin Trust (GBTC) lost $280 million in capitalization, while the Grayscale Ethereum Trust (ETHE) saw an even steeper loss of $483 million.

The outflow trend isn’t unique to Grayscale’s BTC-based products. Data from the SoSoValue platform reveals that the total capital outflow from all U.S.-based Bitcoin ETFs amounted to a significant $706.2 million during the same period. This shows a broader negative sentiment among investors toward Bitcoin-backed funds.

In contrast to the massive withdrawals from Bitcoin ETFs, Ethereum-based products demonstrated comparatively better performance. Between September 2 and 6, only $91 million was withdrawn from U.S. Ethereum ETFs. Notably, many investors moved their funds from Grayscale’s ETHE to similar ETH-based funds managed by competing companies, resulting in these alternative products attracting new investments.

Conclusion

Grayscale Investments has experienced a significant drop in cryptocurrency holdings due to falling asset prices and substantial fund outflows, particularly from its Bitcoin and Ethereum ETFs. As Bitcoin ETFs across the U.S. suffer from capital outflows, Ethereum-based products seem to be holding up relatively better, attracting new investments. The ongoing shifts in investor sentiment reflect broader market trends and may continue to influence the performance of these funds moving forward.