Grayscale Bitcoin Trust ETF

The Grayscale Bitcoin Trust (GBTC) transferred 8,730 Bitcoin 

BTC tickers down

$43,123 , worth over $376 million, to Coinbase Prime deposit addresses on Jan. 16, according to data from blockchain analytics platform Arkham Intelligence. The transfers imply that the fund may have been forced to sell some of its Bitcoin as its share price declined.

Some analysts have argued that outflows from the trust are weighing on Bitcoin’s price and are partially responsible for its decline over the past few days. Despite the outflows, the price of Bitcoin appears to have stabilized during mid-day United States trading hours on Jan. 16.

The Grayscale Bitcoin Trust is one of the largest single holders of BTC in the world. Prior to Jan. 11, most investors in the fund could not redeem their shares for Bitcoin or a cash equivalent. But beginning on Jan. 11, the trust was converted into an exchange-traded fund (ETF). 

Since that time, authorized participants have been allowed to buy up shares from investors and redeem them for the cash equivalent of the Bitcoin these shares represent. When they do so, the trust is required to sell off BTC in order to pay these recipients. This process generally only occurs when the price of GBTC is lower than the value of the BTC it represents.

On Jan. 12, the trust transferred $41 million to a Coinbase Prime wallet, according to Arkham data, implying that the trust may have sold BTC. At the time, some traders speculated that this outflow may have caused Bitcoin’s sharp price decline that day. 

Also on Jan. 12, Bloomberg analyst Eric Balchunas claimed in a post to X (formerly Twitter) that the Grayscale Bitcoin Trust experienced a total of $95.1 million of outflows on Jan. 11 and $484.1 million on Jan. 12 by the close of trading. Balchunas cited Bloomberg Terminal as his source.

Related: Grayscale was key to BTC ETF approval — Crypto Mom

Balchunas also claimed that other Bitcoin ETFs, such as the iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund, received inflows of nearly $1.4 billion over the course of these two days. After accounting for GBTC’s outflows, this implies that the U.S. spot Bitcoin ETF market experienced net inflows of more than $818 million over the first two days of its trading, despite the broader Bitcoin market facing losses during the same period.

On Jan. 16, Arkham data showed further outflows of $376 million BTC from the Grayscale Bitcoin Trust by 7:17 pm UTC. The U.S. stock market closes at 9:00 pm UTC.

Some traders blame the higher GBTC fees for the outflows. GBTC charges a 1.5% management fee, which critics say is higher than most of its competitors.

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