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The Grayscale Bitcoin Trust (GBTC) experienced significant withdrawals, with $359 million leaving the fund on Thursday (Mar 21).
Those outflows come on the heels of a week of heavy withdrawals, culminating in a record single-day withdrawal of $642 million on Mar. 18. These recent withdrawals have escalated the total weekly outflows from GBTC to $1.8 billion, marking the fourth straight day of net withdrawals across all Bitcoin (BTC) exchange-traded funds (ETFs).
We've got a negative flow day for the Cointucky Derby #Bitcoin ETFs thanks to $GBTC's $643 million outflow day pic.twitter.com/scmVgmwtiH
— James Seyffart (@JSeyff) March 19, 2024
What’s causing the Bitcoin ETF outflow?
There’s speculation that the wave of withdrawals from Grayscale’s fund might be winding down. Eric Balchunas, a Senior ETF analyst at Bloomberg, suggests that the outflows could be largely attributed to bankruptcies within the cryptocurrency sector, indicating that the downturn might be nearing its end.
What a pounding. Thought worst was over. Guess not. Who is leaving now that wasn’t motivated to leave past two months? https://t.co/YNX1dBt2FM
— Eric Balchunas (@EricBalchunas) March 21, 2024
Balchunas pointed out that withdrawals from significant industry players like Gemini or Genesis are likely being redirected into purchasing Bitcoin, which in turn supports the market. He expressed optimism suggesting that “the worst is probably close to being over.”
The more I think about it the more likely the uptick in flows is related to the bankruptcies bc of the size and consistency. The flows in Feb showed what retail outflows look like, smaller and random pattern. Also any Gemini/Genisis outflows likely buying btc w cash hence market…
— Eric Balchunas (@EricBalchunas) March 22, 2024
As of March 21, Grayscale disclosed that its Bitcoin Trust had $23.2 billion in assets under management — now standing at under $23.24. Since converting to an ETF on January 11, GBTC has seen a reduction of $13.6 billion in assets.
Independent researcher ErgoBTC observed that roughly $1.1 billion of the recent GBTC outflows might be linked to the bankrupt cryptocurrency lender Genesis. Ergo highlighted a correlation between the timing and volume of GBTC outflows and Genesis inflows, suggesting a direct relationship.
Genesis was granted court approval in February to sell $1.3 billion worth of GBTC shares to settle its debts. Before this, the bankrupt exchange FTX had sold off its entire stake of 22 million GBTC shares, nearly $1 billion worth, effectively liquidating its position.
Amid these market movements, Bernstein has updated its forecast for Bitcoin, predicting a significant rise. The investment firm has raised its year-end Bitcoin price target to $90,000 from its earlier estimate of $80,000, buoyed by a recent uptick to around $74,000 and a positive reception to new spot BTC ETFs.
Bernstein analysts, Gautam Chhugani and Mahika Sapra, attribute their bullish outlook to several factors: the commencement of a new Bitcoin bull cycle, robust inflows into ETFs, a surge in miner capacity, and unprecedented miner revenues, presenting a compelling case for equity investors interested in the cryptocurrency sector.
Furthermore, Bernstein has adjusted its prediction for the upcoming Bitcoin halving in April, now anticipating a 7% reduction in the hash rate, a measure of mining computational power. This outlook is more optimistic than their prior estimate of a 15% decline, expecting a smoother transition and better industry consolidation than before.
The developments follow some recent reports suggesting that Bitcoin may be heading towards its biggest crash so far. Also, earlier this week the world’s first cryptocurrency saw a brief flash crash down to $8,900 on BitMEX, before quickly returning over $60,000.
