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Bitcoin Exodus Over? Grayscale Record ETF Outflows Slow Down

Last Updated March 22, 2024 11:30 AM
Teuta Franjkovic
Last Updated March 22, 2024 11:30 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Heavy Bitcoin ETF outflows continue, but one analyst sees a potential slowdown.
  • Eric Balchunas attributes the large outflows to crypto firm bankruptcies and the need to sell GBTC to repay creditors.
  • With significant forced sales ending, he also predicts that future outflows might come primarily from retail investors.

Grayscale’s Bitcoin exchange-traded fund (ETF) experienced another day of significant outflows , with nearly $359 million leaving the fund on March 21.

However, analysts believe this trend of outflows may be nearing its conclusion.

Grayscale Outflows Mount to $1.8 Billion This Week

The Grayscale Bitcoin Trust (GBTC) saw net outflows of $358.8 million on March 21. This continues  a trend following a record-breaking day on March 18, when it experienced its largest daily outflow of $642 million.

Grayscale outflow
Credit: Farside

This week’s cumulative outflows from the Grayscale Bitcoin Trust (GBTC) have reached $1.8 billion. Not only that, but there have now been four straight days of net outflows across all 10 Bitcoin ETFs.

Analyst Sees Light at the End of the Tunnel

On March 21, Eric Balchunas, a senior ETF analyst at Bloomberg, suggested  that the significant outflows Grayscale has been experiencing might be nearing an end. He attributed the bulk of these outflows to the bankruptcies of crypto firms, noting their “size and consistency” as influential factors.

Balchunas also suggested that any Gemini/Genisis outflows were probably purchasing BTC with cash. This, he speculated, could be why the market is holding up.

He also indicated that the worst may be nearing its end. Once it is over, Balchunas said, only retail investors would remain, leading to flows resembling the February trickle.

As of March 21, Grayscale’s Bitcoin Trust reported holding a total of $23.2 billion in assets under management. Since its conversion to an ETF on January 11, GBTC has dropped by $13.6 billion.

$1.3B GBTC Sell-Off Approved by Court to Pay Creditors

Pseudonymous independent researcher ErgoBTC  agreed with Balchunas. They proposed that around $1.1 billion worth of GBTC outflows in recent weeks seem to have originated from bankrupt crypto lender Genesis.

Meanwhile, pseudonymous crypto market commentator WhalePanda echoed  a comparable sentiment. They referenced a March 19 statement from Genesis indicating the company would be returning assets to creditors “in kind”. This, therefore implyed that the defunct lender would sell GBTC shares for Bitcoin.

On February 14, Genesis received approval from a United States court to start liquidating $1.3 billion worth of GBTC shares to repay its creditors.

Nearly a month earlier, bankrupt cryptocurrency exchange FTX sold 22 million GBTC shares worth nearly $1 billion, completely liquidating all of its holdings.

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