By Tom Blitzer
Key Insights:
- Grayscale’s GBTC witnesses the lowest withdrawals post ETF conversion, reflecting investor behavior shifts toward lower fee alternatives.
- Bitcoin whales accumulate despite market volatility, signaling long-term bullish sentiment among significant players.
- Challenges loom for Grayscale’s Bitcoin fund with Genesis Global Holdco’s liquidation plan approved by a bankruptcy judge.
On February 23, Grayscale’s GBTC witnessed its lowest day trading since moving to an ETF, with withdrawals totaling $44.2 million.
In January, Grayscale received approval to transform its existing bitcoin trust into an exchange-traded fund (ETF), creating the largest bitcoin ETF globally, managing over $28.6 billion in assets.
The application’s approval and the registration statement’s effectiveness will allow GBTC to operate as a spot Bitcoin ETF. The approval will make it among the first such products to be released to market in the U.S. The ticker symbol GBTC will identify GBTC shares on NYSE Arca.
However, the last several days have seen outflows from Grayscale’s Bitcoin Trust (GBTC) hit a record low, indicating a slowing in withdrawals.
Recording the Lowest Daily Volume
BitMEX research indicates that on Feb. 23, GBTC had withdrawals of $44.2 million, the lowest daily volume since its conversion on Jan. 11 from an over-the-counter product to an exchange-traded fund (ETF).
GBTC recorded withdrawals of $5.64 billion at the end of January, with a noteworthy $640 million leaving on January 22 alone. There has been a $1.8 billion decrease in outflows in February. $7.4 billion worth of GBTC has been taken out since it launched.
On the other hand, Fidelity’s FBTC has raised over $4.7 billion in capital since its inception, while BlackRock’s IBIT has received over $6.6 billion in investments. With $1.4 billion in inflows during the same time, ARK 21Shares holds the third place.
Bitcoin traded at $51,099 at the time of writing, seeing a marginal decline of 0.2% over the past 24 hours. Recent market movements have triggered analysts’ conversations, particularly regarding breaking the $51,500 mark.
This price point had been crucial in discussions surrounding a potential Bitcoin rally. Furthermore, analysts are concerned about the decline below $50,970, suggesting a possible shift toward a more bearish sentiment in the short term.
However, renowned trader John Bollinger cautions investors about the cyclical nature of markets, stating that short-term fluctuations may not necessarily derail the long-term bullish trend.
Outflows from GBTC
It was expected that GBTC would make a significant exit. Following the spot Bitcoin ETF’s approval by the Securities and Exchange Commission on Jan. 10, GBTC holders could convert and redeem their shares. In the past, investors had to sell shares on the secondary market to liquidate their holdings.
Analysts report that investors have also rebalanced their portfolios recently and moved to Bitcoin ETFs with lower fees. Other issuers charge as little as 0.9%, while GBTC charges a 1.5% annual management fee.
However, Grayscale’s fee structure can offset the significant losses. According to ETF Store president Nate Geraci, they can have assets chopped by 90% and still make more than all of the other issuers combined.
Challenges Ahead
Grayscale’s Bitcoin fund could be facing more difficulties. Recently, a judge authorized the insolvent cryptocurrency company Genesis Global Holdco to liquidate $1.3 billion worth of GBTC shares to pay back investors.
The bankruptcy judge approved Genesis Global Holdco’s plan to liquidate $1.3 billion in Grayscale Bitcoin Trust (GBTC) shares to repay investors. Genesis owns about 35 million shares of GBTC in addition to shares of Grayscale Ethereum Classic Trust (ETCG) and Grayscale Ethereum Trust (ETHE). Though there weren’t many complaints, Grayscale didn’t try to obstruct the procedure.
Share redemption will be facilitated by the SEC’s approval of GBTC’s transformation into a Bitcoin exchange-traded fund. Genesis paid the SEC $21 million to resolve a complaint involving the sale of unregistered securities made possible via the Gemini Earn initiative.
Bitcoin Whales
Recent activity on the Bitcoin network shows that, despite market volatility, wallets holding more than 100 Bitcoin and not connected to centralized exchanges, known as “Bitcoin whales,” are accumulating.
Rather than being distributed, these entities appear to be in a state of collecting. According to cryptocurrency researcher Ki Young Ju, the current “realized price” for this type of whale cohort is $40,500. Despite short-term price swings, this behavior highlights an optimistic attitude in the market and shows that essential players place their bets on Bitcoin’s long-term potential.
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