By Michael Scott
The weekly report by European-based asset manager in digital assets CoinShares shows that Switzerland and Germany suffered the hardest hit in the recent trading. The report portrays Canada as suffering the sizable outflows casualty in the month.
CoinShares attributes the outflows that engulfed Grayscale Bitcoin Trust (GBTC) to investors taking profit by cashing their positions, which fueled the recent slump in crypto prices. Besides, the outflows triggered subsequent exits witnessed in digital asset investments in Canada and Europe.
The January 28 report by Europe’s leading digital asset manager attributed the recent price declines witnessed in crypto to the substantial outflows suffered by the incumbent ETF issuer – Grayscale Investments. CoinShares revealed that GBTC suffered a US $5 billion flight in itself, triggering subsequent outflows in other regions.
Switzerland and Germany Suffer Huge Outflows
CoinShares reports that the digital assets in two European markets – Switzerland and Germany bore the greatest wrath of the GBTC-inspired outflows. In particular, Switzerland recorded $59.8 million in outflows, while Germany’s outflows totaled $31.7 million in January 22-26 trading.
The CoinShares data shows that Canada’s crypto assets products suffered the largest outflows in the month, aggregated to $209.8 million. The North American nation was trailed by Germany at $124.5 million, with Sweden registering a $34.2 million outflow in January.
Brazil emerged as the outlier with digital asset products in South America, realizing a major inflow of $10.3 billion as other markets plunged into a bloodbath of exits. The weekly inflow took Brazil’s monthly-to-date inflow to $27.6 million.
A review of the weekly flows for the crypto investment product shows that the US suffered nearly $500 million outflow in the second full week. The $499.7 outflow eroded the monthly-to-date flows for the US to 857.1 million,
GBTC Flight Explained
CoinShares observed that though nine of the newly approved spot Bitcoin ETFs realized closer to $1.8 billion inflows, such was inadequate to patch the bleeding witnessed in Grayscale’s (GBTC) as investors sort profits by cashing from their undervalued positions.
CoinShares reports that GBTC outflows edged closer to $2.2 billion in the week’s trading. Nonetheless, the digital asset provider noted that GBTC outflows were subsiding as the daily total reduced over the week.
The outflows witnessed by the GBTC were anticipated since, for years, the trust delivered a profitable trade option for investors. Investors borrowed funds to enter Grayscale’s fund and later scalp profit on the premium that YCharts data show reached an all-time high of 43% in 2019.
CoinShares illustrated that the GBTC arbitrage trade ended in February when the premium turned into a discount. The six-month lock period imposed on the investors trapped many in the fund. The investors became unwilling to dispose of the shares as the discount continually worsened over time.
Outflow from GBTC Subsides
A review of YCharts data reveals that the spot Bitcoin ETF approval hype that dominated since mid-2023 gradually eroded the discount. By Thursday, January 26, YCharts data indicates that the discount dropped to 0%.
CoinShares observed that though GBTC suffered a $5 billion flight in January, the inflows into the newly issued spot Bitcoin ETFs tally $5.94 billion since their listing on January 11. GBTC is among the trio of spot Bitcoin ETF issuers, alongside BlackRock and Fidelity, that have dominated the trade volume.
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