Bitcoin Recovery and Silk Road BTC Sale
Bitcoin (BTC) has experienced a recovery, pulling the rest of the market up with it, despite ongoing outflows from spot Bitcoin exchange-traded funds (ETFs). The U.S. government has made moves to sell $131 million in BTC that was confiscated from Silk Road. Additionally, Terraform Labs has filed for bankruptcy.
Outflows from Spot Bitcoin ETFs
- This week, there have been significant negative net flows from the spot Bitcoin ETF market, primarily due to large outflows from the Grayscale Bitcoin Trust (GBTC) as investors exit the project due to high fees.
- On January 24th, the spot Bitcoin ETF market experienced its largest intraday outflow since it opened for trading. The products saw a cumulative negative net flow of $159 million that day, marking their ninth day of trading.
- While other ETF products had inflows on January 24th, they were not enough to offset the massive outflows from GBTC, which amounted to $429 million.
- On January 25th, the tenth day of trading, these products saw another negative net flow of $80 million. GBTC recorded significant outflows once again, while other products like BlackRock’s IBIT had inflows.
- On January 25th, Grayscale’s ETF product experienced $394 million in outflows, which canceled out the $170 million inflows from BlackRock’s IBIT and $101 million inflows from Fidelity’s FBTC.
- A report earlier in the week revealed that Grayscale has sold 52,227 Bitcoin tokens worth $2.14 billion since the ETF approval. At that time, Grayscale held 566,973 BTC worth $23.21 billion.
- These outflows added to the selling pressure on BTC and contributed to its sustained downtrend, although JPMorgan analysts noted that GBTC outflows were slowing.
Alameda Withdraws Grayscale Case and FTT Surges
- Alameda Research, a sister firm to FTX, has withdrawn its case against Grayscale, its executives, and affiliated companies. This news coincided with reports that FTX had sold 22 million GBTC shares, potentially influencing the case withdrawal. As a result, FTX Token (FTT) surged 10%.
Asia’s Entry into Bitcoin ETF Discussion
- Asia has also entered the conversation about spot Bitcoin ETFs this week, following the lead of the U.S. Reports suggest that Hong Kong may introduce spot BTC ETF products in the middle of the year. Several asset managers in Asia have already expressed interest in launching these products.
Bitwise Exposes ETF Wallet and SEC Delays Ethereum ETF
- Bitwise became the first firm managing spot Bitcoin ETFs to share the physical Bitcoin address of its ETF product. This move was aimed at increasing transparency and was well-received by the crypto community.
- The wallet received public donations after becoming public, including a notable inflow of 0.00042069 BTC from an unidentified address. The address also received BRC-20 tokens, with total donations amounting to $5,000.
- Meanwhile, the U.S. SEC has delayed a decision on two spot Ethereum products, pushing BlackRock’s product decision to March and Grayscale’s filing to May. Commissioner Hester Peirce has stated that the SEC will approach Ethereum ETF filings differently than Bitcoin ETFs.
Bitcoin Recovers $42,000
- Despite bearish pressure and outflows from spot Bitcoin ETFs, Bitcoin has made a recovery. After dropping to a yearly low of $38,555 on January 23rd, BTC surged 4.66% to $41,823 on January 26th. It eventually reclaimed and held above $42,000 on January 27th, reaching a 10-day high of $42,842. The rest of the market also experienced an upsurge.
U.S. Government Plans to Sell Silk Road BTC
- As Bitcoin aimed for a full recovery, concerns about selloffs arose with reports that the U.S. government intends to sell off $131 million in BTC that was confiscated from Silk Road three years ago.
- This week also saw a drug lord from Silk Road pleading guilty to operating an illicit drug network and forfeiting about $150 million in crypto proceeds.
Terraform Labs Files for Bankruptcy
- Terraform Labs, the firm behind the Terra ecosystem, has filed for Chapter 11 bankruptcy in the U.S. after facing legal battles. Crypto.com plans to delist Terra (LUNA), and following Terraform Labs’ bankruptcy filing, the exchange also seeks to delist Terra Classic (LUNC).
Hot Take: Bitcoin Recovery and ETF Outflows
Despite sustained outflows from spot Bitcoin ETFs, Bitcoin has managed to mount a recovery, pulling the rest of the market up with it. This recovery comes at a time when the U.S. government plans to sell off BTC confiscated from Silk Road. While concerns about selloffs persist, Bitcoin has shown resilience and reclaimed the $42,000 level. The spotlight is also on Asia, as discussions about spot Bitcoin ETFs gain traction in the region. As the market continues to evolve, transparency and regulatory decisions play a crucial role in shaping the future of cryptocurrencies.
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