Bitcoin Drops Below $40,000 Amid GBTC Sell-Offs
Bitcoin (BTC) experienced a nearly 9% decline on January 22, falling to around $39,700 on exchanges such as Binance and Coinbase. The drop in the price of the largest cryptocurrency can be attributed to outflows from Grayscale’s spot Bitcoin ETF, which is based on the company’s GBTC product.
Outflows from Grayscale’s Spot Bitcoin ETF
The GBTC fund is the largest spot BTC ETF in the U.S., with over $20 billion in assets under management. Since exchange-traded funds that track spot Bitcoin prices were approved by the Securities and Exchange Commission (SEC), GBTC has seen daily outflows of up to $500 million, resulting in over $2.8 billion leaving the fund.
Grayscale Deposits BTC into Coinbase Prime Accounts
In order to liquidate and redeem the BTC held by its ETFs, Grayscale has deposited approximately 52,227 BTC worth an estimated $2.2 billion into Coinbase Prime accounts from its custodial wallets. The firm also holds GBTC Bitcoin with Coinbase.
FTX Sells Millions of GBTC Shares
Defunct crypto exchange FTX, under bankruptcy administrator and CEO John J. Ray III, has sold millions of GBTC shares for $1 billion. Additionally, FTX-affiliated crypto hedge fund Alameda Research has dropped its lawsuit against Grayscale and Digital Currency Group, alleging internal malpractice.
Nasdaq Acknowledges Spot BTC ETF Options
The SEC has acknowledged Nasdaq’s request for spot BTC ETF options. These derivatives allow traders to speculate on an asset’s volatility or hedge against it, potentially attracting more capital into Bitcoin ETFs.
Hot Take: Bitcoin’s Price Declines Due to GBTC Sell-Offs and BTC Deposits on Coinbase
Bitcoin’s price dropped below $40,000 as a result of significant sell-offs from Grayscale’s spot Bitcoin ETF and the deposit of BTC on Coinbase. The outflows from Grayscale’s GBTC fund, combined with FTX’s sale of millions of GBTC shares, have contributed to the decline. In addition, Grayscale has deposited a substantial amount of BTC into Coinbase Prime accounts for liquidation and redemption purposes. However, there is potential for increased capital inflow into Bitcoin ETFs with the SEC acknowledging Nasdaq’s request for spot BTC ETF options. These developments highlight the ongoing volatility and evolving landscape of the cryptocurrency market.
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