Decrease in Grayscale's Bitcoin Trust Outflows Prompts Hope but Draws Caution
Summary:
Grayscale’s Bitcoin Trust (GBTC) experienced a decrease in outflows for two consecutive days, triggering hopes of a halt to the ongoing Bitcoin selling spree. Despite this, Bitcoin ETF analyst Eric Balchunas cautions that the reduced outflow rate does not necessarily indicate an end to the outflows from GBTC. Further confusion arises as blockchain tracking firm Arkham Intelligence warns that the actual outflow data could be misunderstood due to Bitcoin transactions often being split among multiple addresses.
The decreasing pace of outflows from Grayscale’s Bitcoin Trust (GBTC) for two consecutive days has sparked some optimism that the selling spree involving billions of dollars in Bitcoin (BTC) might be coming to a close. On the 24th of January, the outflows from GBTC were tallied at $429 million, the lowest daily outflow since the initiation of Grayscale’s Bitcoin spot ETF on 11th January. That marked a 33% slowdown compared to the outflows at the beginning of the week on Jan. 22.
Eric Balchunas, an ETF analyst with Bloomberg, suggested in a post from January 25th that outflows from GBTC seem to be decreasing, even though the numbers are still significant. Balchunas previously stated the there was too much uncertainty to predict the end of the "mass exodus" from GBTC. Over the span of nine trading days, GBTC has seen a loss of approximately 106,092 BTC, equivalent to around $4.4 billion.
However, the falling rate of daily outflows does not assure that the GBTC "hemorrhage" has concluded or is decelerating. Balchunas had projected that GBTC would have to lose about 25% of its total outstanding shares to put a halt to the outflows. Blockchain monitoring company Arkham Intelligence issued a cautionary statement about the potential misinterpretation of GBTC outflow data.
A post on January 24 from Arkham specified that GBTC outflow information broadcasted on their platform is divided between Coinbase Prime and newer GBTC deposit addresses, implying that not all Bitcoin being transferred out of Grayscale's Bitcoin Trust is necessarily being cashed out. According to Arkham, "GBTC deposit wallets often distribute to several addresses… this signifies that a portion of the BTC transferred in a transaction may be directed to a different address than the primary recipient shown in the transaction interface.
Published At
1/25/2024 6:30:35 AM
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