Significant Outflows from Higher-Cost Crypto Fund Issuers
A recent report by CoinShares reveals that higher-cost crypto fund issuers in the United States have experienced a significant outflow of $2.9 billion since the new spot Bitcoin ETFs hit the market. While digital asset investment products showed high trading volumes amounting to $11.8 billion, they experienced minor outflows of $21 million last week.
Growing Dominance of Bitcoin ETFs
The surge in trading activity highlights the growing dominance of exchange-traded products (ETPs) and their impact on the overall market. Incumbent higher-cost issuers in the US saw $2.9 billion exiting their funds, while newly issued Bitcoin ETFs received $4.13 billion in inflows since their launch. This indicates a clear preference for cost-efficient options offered by BlackRock or Fidelity’s spot-based Bitcoin ETFs.
Challenges for Altcoins and Growing Confidence in Blockchain Equities
Altcoins faced challenges during this period, with Ethereum (ETH) and Solana (SOL) witnessing outflows of $14 million and $8.5 million, respectively. On the other hand, blockchain equities attracted significant inflows totaling $156 million, indicating growing confidence in blockchain-related companies over nine weeks.
Regional Inflows and Outflows
The United States attracted inflows of $263 million, while Canada and Europe witnessed outflows of $297 million. This suggests a minor migration of assets to the US due to more competitive fees.
FTX and Grayscale’s Bitcoin Sale
Grayscale transferred a substantial amount of Bitcoin to its ETF custodian, Coinbase, resulting in a significant price correction of over 9%. Grayscale transferred an additional 15,560 BTC to Coinbase, adding to the outflows from their holdings. This follows previous outflows of 4,000 BTC and 11,700 BTC.
Sell-offs of Grayscale’s Bitcoin Trust GBTC Shares
Reports highlight significant sell-offs of Grayscale’s Bitcoin Trust GBTC shares by investors, with over $2 billion worth of GBTC sold. The FTX estate sold 22 million GBTC shares, reducing their holdings to zero. These transfers and sell-offs have intensified selling pressure in the Bitcoin market despite the approval of Bitcoin ETFs.
Hot Take: Selling Pressure Intensifies in the Bitcoin Market
The combined effect of Grayscale’s BTC transfers and the GBTC sell-off has intensified selling pressure in the Bitcoin market. It remains to be seen how this will affect BTC’s price action as the halving event approaches. As of now, BTC trades at $40,500, down by over 2.7% in the past 24 hours and 4.3% in the past seven days.
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