GBTC Bleeds Another $443 Million as Bitcoin Price Drops Below $61,000

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Bitcoin experienced a significant price collapse amid continued outflows from Grayscale’s converted GBTC spot Bitcoin ETF. 

According to data from CoinMarketCap, the leading cryptocurrency dropped to as low as $60,800 on Tuesday, a 17% decline from its all-time high. 

The decline in Bitcoin price came after a significant outflow of $643 million from the $25 billion Grayscale Bitcoin Trust (GBTC) on Monday, marking its highest outflow since it transformed into an ETF on January 11.

On Tuesday, these products saw another $326.2 million in net outflows. 

Grayscale’s GBTC, in particular, experienced an outflow of $443 million. 

In contrast, ETF products from BlackRock and Fidelity recorded modest inflows of $75.2 million and $39.6 million, respectively.

On March 19, the total net outflow of Bitcoin spot ETF was US$326 million, with net outflows lasting two days. Grayscale ETF GBTC had a single-day net outflow of US$443 million. The Bitcoin spot ETF with the largest single-day net inflow yesterday was BlackRock ETF IBIT, with a… pic.twitter.com/jkk3swoF7E

— Wu Blockchain (@WuBlockchain) March 20, 2024

Over $650 Million Liquidated as Bitcoin Remains Volatile 

According to data by CoinGlass, long and short traders suffered more than $650 million in losses across major centralized exchanges over the past 24 hours.

More specifically, 189,935 traders have been liquidated, with the total long liquidations coming in at $491 million and short liquidations coming in at around $165 million.

Crypto exchange OKX took the lion’s share of these liquidations at over $271 million, followed by Binance at $229 million and Bybit at around $104 million. 

Bitcoin-tracked futures experienced $229 million in both short and long liquidations over the past day while Ethererum-linked futures saw over $157 million in liquidations. 

Previously, spot Bitcoin ETFs had been setting records, driving Bitcoin’s price to new all-time highs. 

However, the recent outflows suggest a shift in investor sentiment and a cautious approach. 

One potential factor influencing investor behavior is the impending decision by the Federal Reserve, scheduled to be unveiled on Wednesday. 

While the consensus predicts no change in the benchmark interest rate at this time, concerns linger regarding future rate cuts, especially if stubborn inflation persists. 

Such a scenario may not favor Bitcoin bulls, leading investors to adopt a wait-and-see approach.

Grayscale to Drop Fees Overtime

Grayscale plans to gradually reduce fees on its flagship product as outflows soar to $12 billion. 

According to Grayscale CEO Michael Sonnenshein, the cryptocurrency fund manager anticipates fee reductions for the Grayscale Bitcoin Trust ETF in the coming months as the crypto ETF market matures.

Sonnenshein confirmed in an interview with CNBC that as the market evolves, fees for GBTC will decrease. 

Grayscale had previously defended its higher-than-average charges, explaining that fees tend to be higher for new products in their initial stages. 

Sonnenshein expects a similar trend for GBTC, with fees decreasing as the fund grows and the market matures.

Since its conversion into an ETF in early January, GBTC has experienced outflows exceeding $12 billion. 

Sonnenshein acknowledged that outflows were expected as investors sought to capitalize on profits, arbitragers exited the fund, and individuals unwound positions tied to bankruptcies and forced liquidations.

Industry experts suggest that the insolvency of cryptocurrency giant FTX has played a significant role in the GBTC sell-off. 

FTX, a major holder of GBTC, filed for bankruptcy in November 2022, and the FTX bankruptcy estate reportedly sold off the majority of its shares in Grayscale’s bitcoin ETF.

“We’re kind of at the end of that first inning now, where the pent-up demand for buying has hopefully been satisfied, the pent up demand for selling has also hopefully been satisfied,” Sonnenshein added.

“And now we’re kind of starting to move towards that second and third inning, where there’s so much more of the market that still is not yet accessing these products.”

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