Grayscale's Bitcoin Trust (GBTC) recently recorded its lowest level of outflows since it was converted to an exchange-traded fund (ETF), indicating a decrease in the rate of withdrawals.

Data from BitMEX Research revealed that on February 23, GBTC witnessed withdrawals amounting to $44.2 million, marking the smallest daily outflow since its shift from an over-the-counter product to an ETF on January 11. Following this transition, January saw GBTC facing $5.64 billion in total withdrawals, with a single day in January experiencing a withdrawal surge of $640 million. However, February has shown a tapering in outflows, totaling $1.8 billion for the month. Since its establishment, GBTC has seen a cumulative outflow of $7.4 billion.

In comparison, investment inflows into competitors like BlackRock’s IBIT and Fidelity’s FBTC have been robust, with IBIT attracting over $6.6 billion and FBTC over $4.7 billion. ARK 21Shares also saw substantial inflows, with $1.4 billion recorded.

The decrease in GBTC outflows was somewhat expected after the SEC’s approval of the spot Bitcoin ETF on January 10, which allowed GBTC shareholders to convert and redeem their shares directly, a change from the previous requirement to sell shares on the secondary market for exiting investments.

Market analysts have observed a trend of investors shifting their portfolios towards Bitcoin ETFs that offer lower fees compared to GBTC’s 1.5% annual management fee, with some new entrants charging fees as low as 0.19%.

Furthermore, Grayscale faces potential challenges as Genesis Global Holdco, a bankrupt crypto firm, received court approval to sell $1.3 billion of GBTC shares to pay back investors. Despite these outflows, Grayscale's fee model may still ensure profitability. Nate Geraci, president of ETF Store, highlighted on social media that even with a 90% reduction in assets, Grayscale could still outearn its competitors due to its fee structure.