Slow Bitcoin ETF Outflows, But Analyst Predicts Price Recovery

Slow Bitcoin ETF Outflows, But Recovery in Prices Is “Just a Matter of Time,” an Analyst Says

25 January 2024

Amidst the tumultuous landscape of Bitcoin exchange-traded funds (ETFs), Grayscale’s spot Bitcoin ETF, GBTC, witnessed a reduction in outflows to $515 million, a decline from the previous day’s $640 million, as reported by James Seyffart, Bloomberg Intelligence analyst.

Despite this deceleration, a surge in the holdings of competing spot Bitcoin ETF issuers is observed, effectively counterbalancing the GBTC outflows. This indicates a potential shift in the balance of demand and supply dynamics in the foreseeable future.

While GBTC transitions from a trust to an ETF, rival spot Bitcoin ETF issuers, such as BlackRock and Fidelity, record an accumulation of over 80,000 Bitcoins. George Tung, an expert in the field, further revealed in a recent video, “BlackRock and Fidelity each hold over $1.4 billion in their respective Bitcoin ETFs, while Bitwise and ARK maintain approximately half a billion in holdings.”

Despite the considerable volume of trade in new spot Bitcoin ETFs and a growing interest in digital assets, the price pressure on Bitcoin, largely ascribed to Grayscale’s continuous outflows, is yet to let up. However, a slowdown in the pace of these outflows may pave the way for a recovery.

Tung further highlighted the role of FTX‘s bankruptcy proceedings in accelerating GBTC’s outflows as it offloaded shares. Similarly, increased outflows from Bitcoin miners preparing for the upcoming halving event contribute to the dynamic. “Bitcoin miners are investing in new equipment, necessitating liquidation,” Tung elucidated.

Ultimately, a restoration in Bitcoin’s price is contingent upon a shift in the supply-demand dynamics. As Tung concluded, “The prevalent weak market conditions have pushed Bitcoin below the $40,000 mark due to excessive selling.”

The wider cryptocurrency market and crypto-centric businesses have shared in the downturn, following the diminished excitement over the market impact of spot Bitcoin ETFs. Despite a nearly 6% fall in the last week, pushing Bitcoin below the $40,000 mark for the first time this year, a slight recovery is observed, hinting at a potential stabilization in market conditions.

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