Investor Exodus from Grayscale Bitcoin Trust Shakes Market, Pushes Bitcoin Below $39,000
Summary:
After a significant investor exodus from Grayscale's Bitcoin Trust (GBTC), Bitcoin's price has fallen below $39,000 for the first time in two months. The exodus occurred following GBTC's successful transition to a spot Bitcoin exchange-traded fund (ETF), recording over $3.4 billion in outflows and triggering Grayscale's move to deposit billions in Bitcoin into crypto exchange Coinbase Prime. Some fear that the GBTC investor withdrawal may have further to go. The outflows have been linked to the dissolved cryptocurrency exchange FTX and the potential movement of Bitcoin from Mt. Gox, adding potential pressure on Bitcoin's price. Currently, Bitcoin is valued at $39,949, recording a marginal increase compared to the previous day.
An unexpected multi-billion dollar exodus of investors from the Grayscale Bitcoin Trust (GBTC) has resulted in Bitcoin's (BTC) value dipping below $39,000, a first in almost two months. After its successful transition to a spot Bitcoin exchange-traded fund (ETF) on January 11, GBTC has experienced outflows exceeding $3.4 billion. As a result, Grayscale has been funnelling billions of dollars' worth of Bitcoin into the cryptocurrency exchange, Coinbase Prime, likely intended for sale. The fear is that GBTC's investor withdrawal may not be over yet, as indicated by Bloomberg ETF analyst Eric Balchunas, who reported a $515 million withdrawal on January 23 and a 13% decline in total shares to date. Still, he surmises that the pace of outflows might be slowing.
A survey by Balchunas questioned the potential extent of the "mass exodus." Nearly half of the participants predicted between a 35-50% total share reduction before the exodus concludes. However, both Balchunas and fellow Bloomberg ETF analyst James Seyffart estimated the limit to be around 25% of total shares. Grayscale's recent data shows 600.5 million shares currently in existence, backed by 536,694.9 Bitcoin. Separate data from CC15Capital reveals that 82,525 Bitcoin has exited GBTC since January 10.
The latest string of withdrawals is supposedly linked to the now-dissolved cryptocurrency exchange FTX, which allegedly offloaded two-thirds of its 22.3 million shares in GBTC within three days of trading. It's speculated that FTX still has about 8 million shares, valued around $281 million, to sell. Another concern within the cryptocurrency community is that Bitcoin from Mt. Gox could soon be on the move, following reports that the Mt. Gox trustee is approaching creditors for identity verification to prepare for the repayment of Bitcoin and Bitcoin Cash (BCH). This move could potentially exert more downward pressure on Bitcoin's value.
At the moment, Bitcoin is priced at $39,949, up 0.60% from yesterday, conforming to data from CoinMarketCap. On January 24, the Crypto Fear & Greed Index reached a century low of 48 points.
Published At
1/24/2024 4:54:02 AM
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