Bitcoin Dips Below $41K Amid Grayscale Outflows, Future Still Bright

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Bitcoin Price Drop and Grayscale Outflows – What’s Going On?

Bitcoin [BTC] fell below $41,000 for the first time in six weeks, while the expected celebration following the approval of Spot ETFs turned out to be a disappointment. The cryptocurrency dropped to $40,761 at 5 AM UTC on January 22, as shown by CoinMarketCap’s data. As traders bought the dip, the price rose back to $41,202.

Grayscale Liquidations Pull BTC Down

Outflows in the billions from Grayscale Bitcoin Trust (GBTC), which was converted into a Spot ETF, were the main reason for the bearish trend. Despite the outflows, Grayscale still holds more than 566,000 Bitcoins in its custody, raising ongoing concerns about bearish conditions.

Well-known Bitcoin analyst Chris J Terry expressed that the value of the cryptocurrency would continue to remain sideways or falling until all remaining Bitcoins, worth about $25 billion, are liquidated. Terry criticized Grayscale’s strategies, saying, “Grayscale’s decision to keep the ETF fees at 1.5% will be remembered as the biggest strategic mistake in crypto history.”

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High Fees Cause Disappointment?

The management fees charged by Grayscale are actually the highest among all ETF providers. Most of the approved ETFs have fees between 0.2% and 0.4%. However, Grayscale has defended the high fees it charges.

In a recent interview with CNBC, Michael Sonnenshein, CEO of Grayscale Investments, argued, “Investors place great value on aspects such as liquidity and track record and who is actually the issuer behind the product. Grayscale is a crypto specialist and has paved the way for many of these products.”

Is the Rotation to Other ETFs Increasing?

However, not everyone believes that the entire GBTC asset will be sold. Mike Novogratz, the CEO of Galaxy Digital, disagreed with Terry’s arguments. He stated, “While I believe people will sell GBTC, I think most will switch to other ETFs. This discomfort will end, and BTC will be higher in 6 months.”

However, as it turns out, the net inflows to other ETFs were lower than the outflows from GBTC. It remains to be seen how Bitcoin will handle the downward pressure in the short to medium term. In the long term, however, an inflow of billions is expected in the market.

Source: AMBCrypto, CoinMarketCap, CryptoQuant

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Profile Bitcoin
Symbol BTC
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Last update: 11. June 2024

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