KEY POINTS
- A prominent factor contributing to this decline in GBTC's holdings is the growing volume of outflows
- The biggest chunk of these outflows is credited to FTX estate
- As of 4:49 a.m. ET Wednesday, Bitcoin was trading in the positive territory at $40,012.48
The consistent pattern of outflows observed in Grayscale Investments' GBTC, particularly since its official transition into a Bitcoin exchange-traded fund, has led to a substantial double-digit reduction in the quantity of Bitcoin held within the trust.
A newly published data analysis by Glassnode highlights a significant decline in the holdings of the Grayscale Bitcoin Trust ETF (GBTC). The trust's balance currently stands at approximately 553,000 Bitcoin, marking a notable decrease of approximately 12% from its peak level of 630,000 BTC.
A prominent factor contributing to this decline in GBTC's holdings is the growing volume of outflows, which have amounted to an estimated $3.5 billion over the course of its last seven trading days.
The biggest chunk of these outflows is credited to FTX estate, divesting nearly two-thirds of its GBTC holdings within the first three trading days of the fund's operation as an ETF.
The bankrupt crypto empire has reportedly divested more than two-thirds of its 22.28 million shareholdings in the trust, amounting to approximately $1 billion, as disclosed by sources cited by Bloomberg.
Originally founded in 2013 as a closed-end fund, the Grayscale Bitcoin Trust operated under restrictions that prevented investors from redeeming their shares.
However, following the approval granted by the U.S. Securities and Exchange Commission (SEC), the trust underwent a transformation into an exchange-traded fund (ETF).
Upon its commencement of trading on Jan. 11, this transition provided an opportunity for long-standing investors, including FTX, to liquidate their positions.
On Tuesday, marking the seventh trading day for all spot Bitcoin ETFs, GBTC experienced a substantial outflow of nearly $600 million.
Bloomberg Intelligence ETF analyst James Seyyfart characterized this outflow as the largest that the trust has witnessed since it commenced trading as a Bitcoin ETF.
Woof. BAD day for #Bitcoin ETFs overall in the Cointucky Derby. $GBTC saw over $640 million flow out today. Outflows aren't slowing -- they're picking up. This is the largest outflow yet for GBTC. Total out so far is $3.45 Billion. (Don't have BlackRock data yet) pic.twitter.com/jNOyiTADVq
— James Seyffart (@JSeyff) January 23, 2024
For BTC data chief architect Chris Terry, the price of Bitcoin is likely to maintain a flat or downward trajectory until the Grayscale Bitcoin Trust is fully liquidated -- a process that is expected to involve the selling of approximately $25 billion worth of Bitcoin over the coming weeks.
"Looks like BTC price will continue flat/down until GBTC is liquidated, $25B of selling over the next few weeks. Grayscale decision to keep #ETF fess at 1.5% will go down as the biggest strategic error in crypto history," Terry's tweet read.
Looks like #BTC price will continue flat/down until #GBTC is liquidated, $25B of selling over the next few weeks. #Grayscale decision to keep #ETF fess at 1.5% will go down as the biggest strategic error in #crypto history. GREEDY IDIOTS. @saylor @starkness @aantonop @rogerkver… pic.twitter.com/fjRDfPQgA2
— Chris J Terry (@chrisjterry) January 21, 2024
As of 4:49 a.m. ET on Wednesday, Bitcoin has made a recovery, surging back to the $40,000 price level and currently trading in the positive territory at $40,012.48.
This recent price movement reflects a notable 2.73% increase in Bitcoin's value over the past 24 hours, although it still reflects a 6.24% loss over the previous seven days.
Data sourced from Coinmarket cap reveals that Bitcoin's circulating supply is presently recorded at 19,606,918 BTC, underscoring its significance within the cryptocurrency ecosystem.
Additionally, Bitcoin's market capitalization stands at a robust $783,930,244,546.
