The noose is tightening at Grayscale!


Fri 22 Mar 2024 ▪ 4 min reading ▪ by Mikaia A.

At this breakneck pace, Grayscale's Bitcoin reserves risk running out by the end of July, some crypto analysts warn. The cause of this agitation? Massive outflows of BTC from their ETF which continue unabated. And it's not about to calm down any time soon.

Bitcoin boat and coins

Grayscale Bitcoin Trust: Massive outflows, a warning signal?

The figures concerning Grayscale's GBTC outflows are more than alarming. On March 18, outflows amounted to $642.5 million. The next day, that figure dropped to $443.5 million. As of Thursday, March 21, Grayscale's Bitcoin Spot ETF outflow total for the week reached $1.4 billion.

However, this hemorrhage of funds, which not failing to affect Bitcoin (BTC)is far from diminishing.

Cryptocurrency asset manager Grayscale's Bitcoin exchange-traded fund (ETF) records a new day of massive outings, reports Cointelegraph. On March 21, almost $359 million were withdrawn from the fund, fueling fears, but analysts see an end to this exodus soon.

This $358.8 million net outflow from the Grayscale Bitcoin Trust (GBTC) follows a tumultuous week, marked by the record $642 million outflow on March 18 reported by Farside Investors.

These recent releases bring $1.8 billion total cash outflows this week for GBTC, marking the fourth consecutive day of net outflows across all 10 Bitcoin ETFs.

outgoing-flows-GBTC-Grayscaleoutgoing-flows-GBTC-Grayscale
GBTC outflows – Source: Farside Investors

As of March 21, Grayscale announced that its Bitcoin Trust held $23.2 billion in assets under management. Since its conversion to an ETF on January 11, GBTC has lost a total of $13.6 billion.

An independent researcher, ErgoBTC, pointed out that around $1.1 billion of recent GBTC outflows appear to be linked to bankrupt crypto lender Genesis. This correlation raises questions about the financial health of the sector and the potential impact on the Bitcoin market.

End in sight for Grayscale releases?

Analysts foresee the end of grayscale cash outflow trend imminent. Eric Balchunas of Bloomberg ETF argues that most of these exits are linked to bankruptcies in the crypto sector, and that the worst may be over.

Erich Blachunas' analysis of Grayscale's cash outflows

The more I think about it, the more likely it is that the increase in flows is linked to bankruptcies due to their size and consistency. The February flows showed what retail outflows look like, smaller and more random. Additionally, Gemini/Genesis outflows likely purchased BTC with cash, which is why the market is holding up. Conclusion: the worst is probably about to end. Once it is, only individuals will remain and the flows should gather more in the February runoff. »

Balchunas suggests that the outflows of Gemini or Genesis, two heavyweights in the sector, could soon be reinvested in Bitcoin, thus supporting the market. An analysis which perfectly matches that of ErgoBTC.

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This anticipation suggests a possible turnaround, with an expected strengthening of the cryptocurrency market in the near future.

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Mikaia A. avatarMikaia A. avatar
Mikaia A.

The blockchain and crypto revolution is underway! And the day when the impacts will be felt on the most vulnerable economy in this world, against all hope, I will say that I had something to do with it

DISCLAIMER

The comments and opinions expressed in this article are those of the author alone, and should not be considered investment advice. Do your own research before making any investment decisions.

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