The recent downturn in the cryptocurrency market has cast a shadow over the dominance of Grayscale Investment’s spot Bitcoin ETF, the Grayscale Bitcoin Trust (GBTC), as it experiences a significant decline.

GBTC, once a dominant force in the market, now holds only 37% of the Bitcoin (BTC) holdings it had at its launch in January. The trust's holdings have been halved from around 619,220 BTC to approximately 311,621 BTC, reflecting a sustained capital exodus. Unlike its competitors such as iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC), GBTC charges higher fees, contributing to its decline.

While GBTC has seen a reduction in Assets Under Management (AUM) by 31%, IBIT and FBTC have gained market share in terms of Bitcoin holdings. Notably, IBIT and GBTC were the only spot Bitcoin ETFs to witness capital movements for two consecutive trading days this week, with GBTC experiencing net outflows of $110.1 million on Monday alone.

GBTC’s decline aligns with a recent downturn in the crypto market, resulting in a drastic fall in Bitcoin’s price to $62,276, reflecting a 6% decrease in the past 24 hours. The market capitalization has also reduced by 6% to $1.2 trillion.

Despite the current challenges, investors anticipate the Bitcoin halving event 2024, expected in a few days, to have a positive impact on the cryptocurrency's price. Historically, halving events have led to price increases due to reduced Bitcoin creation and increased scarcity. However, some experts, like Markus Thielen of 10x Research, suggest that significant upward movement in Bitcoin's price may not occur until October this year.

As GBTC faces decline amidst market volatility, investors are closely monitoring the impact of the Bitcoin halving event and its potential to drive price movements. With the cryptocurrency market experiencing fluctuations, the future trajectory of GBTC and other spot Bitcoin ETFs remains uncertain, highlighting the need for cautious investment strategies in these volatile times.