Summary Grayscale Bitcoin Mini Trust ETF offers the lowest expense ratio among top spot Bitcoin ETFs, making it an attractive option for easy, liquid BTC exposure. BTC has meaningfully grown assets under management since 2024, but recent capital outflows from spot Bitcoin ETFs signal rising market caution after the October 10th liquidation event. Compression of mNAV in Bitcoin DATs is limiting new share issuance and could prompt asset sales, adding further downside risk for BTC and related funds. Given deteriorating technicals and capital flows, patience is warranted before increasing Bitcoin exposure, though a full exit from BTC is not recommended. A short time ago, I provided my technical analyst's view of Bitcoin ( BTC-USD ) for Seeking Alpha through an article covering the Volatility Shares 2x Bitcoin Strategy ETF ( BITX ). For those of you who value key levels of support and resistance, I'd encourage you to check out that piece after reading this one. For the benefit of this article, we'll be instead focusing on the capital flow story for Bitcoin through coverage of the Grayscale Bitcoin Mini Trust ETF ( BTC ). In this update, we'll look at spot ETF flows as well as the current DAT setup that I see as potentially troubling. Grayscale Mini Trust ETF As far as simple and easy Bitcoin exposure goes, it's difficult to argue with longing for Grayscale's mini trust. The fund has done a reasonably nice job of stabilizing Grayscale's fee flight problem last year, having grown AUM by 37% year-to-date, while the sister fund has continued to see some pressure on supply. Data by YCharts As of article submission, Grayscale's mini trust holdings denominated in BTC are slightly above 48k coins: Grayscale Bitcoin Mini Trust BTC Holdings (BitcoinTreasuries) The trust has been one of the few US-listed spot ETFs in the market that has been able to meaningfully grow holdings since the beginning of the year. While the iShares Bitcoin ETF ( IBIT ) continues to dominate the market and gobble up supply, BTC has grown through a very simple low-fee offering compared to peers: Fund Name Expense Ratio AUM Grayscale Bitcoin Mini Trust ETF 0.15% $4.89B Bitwise Bitcoin ETF ( BITB ) 0.20% $4.12B ARK 21Shares Bitcoin ETF ( ARKB ) 0.21% $4.21B Grayscale Bitcoin Trust ETF ( GBTC ) 1.50% $17.24B iShares Bitcoin Trust ETF 0.25% $80.47B Fidelity Wise Origin Bitcoin ETF ( FBTC ) 0.25% $20.44B Source: Seeking Alpha Of the top six spot Bitcoin ETFs, which collectively hold over 97% of the total BTC held through US-listed spot ETFs, BTC is the cheapest to own at just 15 basis points. Given Grayscale's notoriety and track record in the sector, my view is you could do a lot worse than simply just buying Grayscale's mini trust shares and leaving them in the 'coffee can' if you want easy, liquid BTC exposure. The question readers must answer for themselves is how much exposure to Bitcoin they want at this time. Updated Capital Flows As I've been articulating through my Seeking Alpha work for the better part of the last year, Bitcoin goes as investment demand for its native asset goes. It is not a network that is experiencing meaningful growth in users or transaction fees compared with prior highs and/or the last bull cycle. Thus, I view BTC as a very simple number-go-up game at this point in time, and the justification for that game is the belief that Bitcoin wins the 'dollar debasement' trade over something like gold ( XAUUSD:CUR ). Rather than make this a Bitcoin vs. gold thing, I have long believed that both assets are useful in a dollar debasement trade and should be considered as fiat-destruction opportunities. That said, I see BTC more as a raw speculative asset than I do XAU. Bitcoin Daily ETF Flows (Analyst's Chart, Farside Data) Prior to the October 10th liquidation event, the capital flow story for Bitcoin had been absolutely phenomenal in what many believed would be 'Uptober.' Through October 9th, the Uptober idea was looking quite good as data from Farside tracked over $5 billion in positive net flows for US spot ETFs. It should go without saying, but that was an absolutely massive start to the month. Everything changed on October 10th following a bearish cascade that liquidated over $19 billion in notional value in a single session. Following that event, roughly $1.6 billion came out of spot ETFs through the remainder of October. November has seen $650 million in negative net flows through Thursday the 6th. Essentially, over $2.2 billion has come back out of these ETFs since the liquidation even on October 10th. And it now isn't just the spot ETF holders who are raising fiat liquidity; even Bitcoin DATs may begin putting pressure on Bitcoin's price. Already trading at a considerable discount to mNAV, Sequans Communications S.A. ( SQNS ) recently sold down 30% of the company's BTC holdings in a capital management move to buy back debt. Sequans is not the only company that is trading at a discount to its BTC stack; a quick glance at Bitcoin Treasuries shows 3 of the top 4 Bitcoin DATs now trading at a slight discount to basic mNAV: Company Bitcoin Value Market Cap Basic mNAV Strategy ( MSTR ) $65m $66m 1.01 MARA Holdings ( MARA ) $5.4m $5.3m 0.98 XXI ((CEP)) $4.4m $4.2m 0.95 Metaplanet ( MTPLF ) $3.1m $3m 0.97 Source: BitcoinTreasuries Among the top 4 Bitcoin DATs, only Strategy is still trading above an mNAV of 1, and I suspect that ratio is on borrowed time due to the company having roughly $150 million in preferred share dividend payment obligations between now and the end of the year. To be totally clear here, Strategy doesn't actually have to sell its BTC if the company's stock trades at a discount to mNAV. But an mNAV discount limits Strategy's ability to dilute its common stockholders to pay preferred share dividends, which is precisely what the company has been doing since March, with roughly 89% of Strategy's ATM usage coming through the common stock. Thus, as Strategy's mNAV goes below 1, the likelihood that the company would sell BTC to pay those dividends does increase. But I want to reiterate a point that I made recently in my coverage of SharpLink Gaming ( SBET ): the key difference between Bitcoin DATs and PoS DATs is the ability to passively stake. Ethereum ( ETH-USD ) DATs like SharpLink can grow their holdings without raising capital at all provided they stake their coins or provide them as liquidity in protocols like Aave ( AAVE-USD ). Bitcoin DATs can't natively stake and must either grow holdings through lending - which introduces risk - or continue to raise capital through debt and/or stock issuance. Given this significant difference, I view ETH or SOL DATs trading at mNAV discounts as safer arbitrage plays than BTC DATs. The elephant in the room here is that the lower these mNAV discounts go, the greater the incentive the DAT managers have to sell the Bitcoin, buy back shares, and capture that arbitrage themselves. To be fair, the same goes for ETH DATs, but ETH is still a productive asset that I don't think the market fully appreciates in a world with increased RWA tokenization. Closing Takeaways Putting all of this together, Bitcoin's setup appears to be deteriorating. I'm of the view that we still haven't seen all of the fallout from the October 10th liquidation event. I believe the $2.2 billion net outflows from spot ETFs are an indication that fear has entered the market. And while buying blood in the streets has worked well for both Bitcoin and stocks over these last two years, I'm seeing additional signals in the market that are problematic. Bitcoin DAT mNAV compression is becoming a problem and limiting the bid on BTC through new share issuance. Deeper mNAV compression below one could actually trigger a move to sell BTC and buy back either debt or common stocks. And I'll reiterate again that Bitcoin's technicals are not ideal, which by itself could put pressure on the coin and proxies like Grayscale's mini trust. While I certainly wouldn't advise selling out of Bitcoin entirely, I do think it's prudent to be patient from here.