By George Ward
Grayscale’s Massive BTC Sales Affects Crypto Markets
Grayscale, a leading digital asset manager, has been at the forefront of attention as it undergoes a substantial shift in its portfolio. The company, known for its Grayscale Bitcoin Trust (GBTC), has experienced more than $3.2 billion in BTC sales since the US SEC approved its GBTC fund into a spot BTC ETF on January 11.
These developments have triggered a wave of concern among traders and investors as BTC’s value continues to plummet, dipping below the $40,000 mark at the time of writing.
Fidelity And BlackRock Acquire More BTCs
Meanwhile, other top asset managers, notably Fidelity and BlackRock, have become the leading BTC buyers during this period. With each of these two having about 39.93K and 34.13K BTC holdings, these firms have been absorbing the BTC sell pressure caused by the Grayscale offload.
However, analysts opine that the outflows from Grayscale are driven by a strategic move to rebalance portfolios and seek investment avenues with lower fees and more attractive returns.
Uncertainties And Speculations
Despite the significant Bitcoin offloading by Grayscale, the crypto community has been reassured by updates from on-chain analytics firms such as CC15Capital, which claim that almost all the BTCs sold by Grayscale have been acquired by other ETFs. According to the latest on-chain data, the average amount of BTC bought by the new spot BTC ETFs, excluding Grayscale, almost match those sold by Grayscale.
Market sentiment, however, appears bearish, as evidenced by a Twitter poll conducted by ETF expert Eric Balchunas. The poll gauged opinions on when Grayscale’s mass BTC sell-offs will cease and the next possible support price level for BTC.
Most respondents predicted a further decline, with nearly half voting that BTC’s price would drop by 35%-50%. Regardless, the real question is, when will Grayscale’s BTC offloading end?
Amidst these developments, there are speculations around the possibility of a strategic acquisition of Grayscale by a traditional ETF issuer. Accordingly, ETF Store president Nate Geraci believes such a move would portend positively for the Bitcoin and broader crypto markets.
ETF expert James Seyffart echoes similar sentiments, suggesting that a more prominent player acquiring the crypto asset manager is theoretically possible, considering the current market conditions.
FTX Offloads $1 Billion GBTC Shares
In a related development, reports indicate that embattled crypto firm FTX offloaded approximately $1 billion of GBTC shares. This substantial sale is a notable addition to the more than $2 billion in total assets withdrawn from GBTC since its conversion into an ETF earlier in the month.
The sale effectively reduced FTX’s ownership in GBTC to zero. While newly approved funds, including those from Fidelity and BlackRock, have experienced inflows, the Grayscale fund witnessed a substantial outflow in billions of dollars.
The market had initially anticipated a surge in Bitcoin’s price with the approval of these ETFs. However, the opposite has been the case, with BTC’s price experiencing a notable decline.