After Genesis Sale Approval, GBTC Sell Off Slows

After Genesis Sale Approval, GBTC Sell Off Slows

Last week, there was a brief spike in the sales of the Grayscale Bitcoin Trust (GBTC), but outflows have cooled off once more.

They have now reached new lows since the conversion of the fund into an ETF back in January.

GBTC

The total value of net inflows recorded in spot Bitcoin ETFs at the end of last week stood at $232.2 million, including outflows of $44.2 million from GBTC.

A day earlier, the outflows from GBTC had stood at $55.7 million, both of which were the lowest daily outflows recorded from Grayscale in the last 45 days.

GBTC has been suffering from non-stop losses since January 11th when it was converted into an ETF. The total losses now stand at $7.4 billion.

As the management fee charged by GBTC is significantly higher than rival funds that are controlled by Fidelity and BlackRock, new investors do not want to buy GBTC shares for Bitcoin exposure.

This is particularly true for investors who are interested in HODLing for the long term. A lot of pre-existing investors in Grayscale also chose to sell off their holdings immediately after the ETF became available.

The outflows

This allowed them to cash in on the significant arbitrage between the fund’s underlying bitcoin and the value of the shares of GBTC.

The fund saw outflows of $500 million every day, also due to the pressure of the bankruptcy of the FTX crypto exchange, but they started to slow down at the end of January.

Once there was a slowdown in the outflows, the following weeks saw the price of Bitcoin rise to $52,000 before it came to a halt.

This was due to another strong wave of withdrawals from GBTC. Daily outflows from the fund surpassed $100 million for five days in a row.

The details

While it is unclear as to who is selling the ETF, bankrupt crypto lender Genesis is believed to be the likely suspect.

Earlier this month, it had received approval to sell GBTC shares worth $1.6 billion. If and when the liquidation period of the company ends, it could prove to be bullish for Bitcoin ETF net flows.

It could be bullish for the price of Bitcoin. The beginning of the week saw Bitcoin break past resistance to reach $53,000 and then it has continued to climb to $56,000 in the last few days.

Meanwhile, BlackRock, the largest rival of Grayscale saw its Bitcoin ETF break a daily trading volume record, as it surpassed $1 billion.

This put it on the list of top 11 ETFs in terms of trading volume. Eric Balchunas, the ETF analyst for Bloomberg, said that this trading volume is a big achievement.

He said that it is big enough to make the ETF suitable for institutional consideration.