The Price of Bitcoin Rebounds Above $41,000 as GBTC Outflows Slow
The price of bitcoin has risen above $41,000, and the outflows for Grayscale’s GBTC converted spot ETF have been slowing down for the third consecutive day.
Data from BitMEX Research shows that GBTC witnessed outflows of $394.1 million on January 25, down from $429.3 million on Wednesday and $515.3 million on Tuesday. While the outflows remain high, yesterday’s figure is the second-lowest since the spot bitcoin ETFs launched on January 11.
On the other hand, the nine newborn spot bitcoin ETFs have not experienced any daily outflows yet.
IBIT had the largest inflows with $170.7 million, followed by FBTC with $101 million and BITB with $20 million. However, the total inflows from the nine ETFs on Thursday were not enough to overcome GBTC outflows, resulting in a net outflow of nearly $80 million.
Liquidations Spike After Bitcoin Uptick
Bitcoin’s rise above $41,000 has led to over $110 million in liquidations on centralized exchanges within the past 24 hours.
The majority of liquidations involved short positions, resulting in a loss of over $66 million. Long positions contributed around $44 million to the total liquidations.
Liquidations occur when a trader’s position is forcibly closed due to insufficient funds to cover losses. This happens when market movements go against the trader’s position and their initial margin or collateral is depleted.
Compared to the beginning of the month, there has been increased volatility that has triggered many leveraged positions to be shaken out. The current annualized bitcoin volatility is at 53.95%, up from around 42% in early January.
More Downside to Come?
JPMorgan analysts suggest that bitcoin could face further pressure on its price if GBTC investors continue to take profits.
GBTC investors, who previously bought the fund’s shares at a discount to net asset value, have been exiting the bitcoin space entirely rather than shifting to cheaper spot bitcoin ETFs.
Chris Burniske of Placeholder VC agrees and speculates that bitcoin could fall to “at least” $30,000 to $36,000 before finding a local bottom. He also believes there is a possibility of testing the mid-to-high 20s before making a move towards previous all-time highs.
Burniske emphasizes the long-term trend remains robust but warns about volatility and the precarious state of the macro environment. He also mentions that new product innovations are on the horizon but not quite there yet.
Hot Take: Bitcoin Rebounds Above $41,000 as GBTC Outflows Slow
The price of bitcoin has rebounded above $41,000, and the outflows for Grayscale’s GBTC converted spot ETF have been slowing down for three consecutive days. While GBTC outflows remain high, they decreased from previous days. On the other hand, the nine newborn spot bitcoin ETFs have not experienced any daily outflows yet. Despite inflows from several ETFs, they were not enough to overcome GBTC outflows, resulting in a net outflow of nearly $80 million. Additionally, bitcoin’s rise above $41,000 led to over $110 million in liquidations on centralized exchanges within 24 hours. Should GBTC investors continue to take profits, analysts suggest further pressure on bitcoin’s price. However, Chris Burniske believes there is potential for bitcoin to fall even lower before finding a local bottom.
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