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Bitcoin ETFs: Grayscale Sell-Off Throws BTC Long-Term Holder Metrics

Last Updated April 5, 2024 1:29 PM
Giuseppe Ciccomascolo
Last Updated April 5, 2024 1:29 PM

  Key Takeaways

  • The recent Grayscale Bitcoin Trust (GBTC) sell-off is impacting traditional Bitcoin metrics like “Supply Last Active” (SLA).
  • These metrics typically increase when long-term investors hold, but GBTC outflows are misleading the data.
  • The collapse of FTX, a major GBTC holder, might have played a role in the sell-off.

The recent sell-off by Grayscale  has brought an intriguing twist to well-established Bitcoin metrics, influencing data trends as we approach the next halving.

Traditionally, analyzing the duration since Bitcoins were last transacted on-chain, based on their “Supply Last Active” (SLA) period ranging from 1 year to 5 or more years, has been a reliable indicator for market cycles. However, the current scenario is significantly affected by Grayscale outflows originating from wallets that have been inactive for an extended period.

Grayscale Sell-Off Impact

Glassnode ‘s chart depicts the overlay of various SLA variants as a percentage of the circulating supply. Typically, as long-term investors hold coins, these metrics tend to rise. Conversely, when long-term investors offload their coins, the metrics decline as older coins change hands.

Historically, long-term holders (LTH), those holding for over 155 days, tend to distribute their coins during bull market peaks, capitalizing on profits accumulated during bearish periods. Despite Bitcoin reaching recent all-time highs, all SLA cohorts have decreased from their previous peak levels.

Long-term holder net position change
Long-term holder net position change. l Source: Glassnode

However, it’s crucial to factor in the impact of the Grayscale Bitcoin Trust (GBTC) selling roughly 300,000 BTC. Investors who acquired GBTC, particularly during discounted periods in recent years, are considered long-term holders, potentially skewing the data due to GBTC outflows.

Examining the net position change of LTH, the current sell-off mirrors a similar intensity witnessed during the peaks of 2013, 2017, and 2021. Nonetheless, market sentiment doesn’t currently suggest a peak, especially with a halving event looming in approximately 15 days.

GBTC ETF Sees Third Consecutive Double-Digit Outflow

According to Farside data, Bitcoin ETFs maintained strong inflows, with a combined net inflow of $106.8 million on April 4. This extends the trend of three consecutive days of net inflows and seven out of the last eight trading days with net inflows.

However, the Grayscale GBTC fund experienced its third consecutive double-digit outflow, totaling $79.3 million, bringing its total net outflow to $15,306.4 billion. Conversely, the BlackRock IBIT ETF saw a robust net inflow of $144 million, increasing its total net inflow to $14,460.3 billion.

Supply last active 1yr+ age bands
Supply last active 1yr+ age bands. l Source: Glassnode

Ark’s ARKB ETF saw its first net inflow since March 28, adding $12 million to $2,233.5 billion. Similarly, the VanEck HODL ETF experienced its most robust net inflow since March 28. It attracted $15.5 million in new investments, bringing its net inflows to $461.7 million.

Overall, the total net inflow across all Bitcoin ETFs now amounts to $12,303.6 billion, indicating continued positive momentum in the digital assets market.

Promise On Fees Cut Hasn’t Helped

Despite Grayscale’s promise in March to reduce fees for investing in its ETF, the outflow hasn’t slowed. CEO Michael Sonnenshein acknowledged that fees on their flagship product would have decreased as the crypto ETF market evolves.

Sonnenshein stated, “I’ll happily confirm that, over time, as this market matures, the fees on GBTC will come down.” During an interview  with CNBC in March, he indicated the firm’s intention to adjust fees in response to market developments. Previously, Grayscale defended its fees, which were higher than the market average.

Sonnenshein told CNBC: “Of course, we anticipated having outflows. Investors have been wanting to either take gains on their portfolio, or arbitragers coming out of the fund, or people unwinding positions that were part of bankruptcies through forced liquidation.”

Market observers contend that the collapse of crypto titan FTX has had a notable impact on the sell-off of GBTC. FTX was a significant holder of GBTC before its insolvency filing in November 2022. As of October 25, 2023, it possessed approximately 22 million shares.
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