Grayscale Bitcoin Trust Transfers $376M in BTC Amid Share Price Decline
Summary:
On January 16, Grayscale Bitcoin Trust (GBTC) transferred 8,730 Bitcoins, valued over $376 million to Coinbase Prime deposit addresses, suggesting the possibility of a Bitcoin sale due to decline in its share price. This follows the trust's transformation into an exchange-traded fund on January 11, allowing authorized parties to purchase shares in exchange for the cash equivalent of the represented Bitcoin. Other Bitcoin ETFs experienced significant inflows despite the broader market facing losses. Critics attribute high GBTC outflows to their elevated 1.5% management fee.
On January 16, Grayscale Bitcoin Trust (GBTC), one of the world’s leading Bitcoin holders, moved 8,730 Bitcoins (valued at more than $376 million) to Coinbase Prime deposit addresses. This information was conveyed through Arkham Intelligence, a blockchain analytics firm. This significant transfer suggests that due to a reduced share price, the fund might have felt compelled to part with some of its Bitcoin holdings. Some financial experts have suggested that such outflows from the trust have contributed to the recent slide in Bitcoin's price. Nevertheless, on January 16, Bitcoin’s price seemed to maintain stability during the U.S. mid-day trade session.
Before January 11, most of Grayscale's investors could not exchange their shares for Bitcoin or its cash equivalent. After the trust transitioned into an exchange-traded fund (ETF) on that date, authorized parties were permitted to purchase shares from investors and trade them for the cash value of the represented Bitcoin. This operation requires the trust to offload Bitcoin to reimburse these buyers, typically occurring when GBTC's price is less than the Bitcoin value it stands for.
On January 12, $41 million was moved to the trust's Coinbase Prime wallet, as per Arkham's records, suggesting a possible Bitcoin sale. Some market players surmised that this outflow led to the sharp drop in Bitcoin's price on that day. Bloomberg analyst Eric Balchunas noted substantial outflows from the Grayscale Trust totaling $95.1 million on January 11 and $484.1 million on January 12 by the end of the trading day.
Simultaneously, Balchunas reported substantial inflows into other Bitcoin ETFs, like the iShares Bitcoin Trust (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC), tallying nearly $1.4 billion over these two days. Despite negative market trends, after accounting for GBTC's outflows, these numbers indicate the U.S. spot Bitcoin ETF market recorded net inflows surpassing $818 million within its initial two trading days.
Further outflows from GBTC of $376 million BTC were noted by Arkham's data on January 16 by 7:17 pm UTC, two hours before the U.S. stock market's closing time. Some industry observers attribute these larger GTBC outflows to the hefty 1.5% management fee charged by GBTC, a rate criticized for being higher than most of its competitors.
Published At
1/16/2024 11:08:51 PM
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