Grayscale’s Bitcoin exchange-traded fund (ETF) experienced significant outflows, with almost $359 million exiting the fund on March 21, continuing a trend of high withdrawals. This follows a massive week of outflows, including the largest single-day outflow of $642 million on March 18.
Senior Bloomberg ETF analyst Eric Balchunas suggested that much of Grayscale’s outflows could soon taper off, primarily stemming from bankruptcies of crypto firms. He speculated that once these outflows cease, only retail investors would remain, resulting in a slowdown similar to the trickle observed in February.
As of March 21, Grayscale’s Bitcoin Trust reported holding $23.2 billion in assets under management. Since its conversion to an ETF on Jan. 11, the trust has experienced a notable decrease of $13.6 billion.
Pseudonymous independent researcher ErgoBTC noted that a significant portion of GBTC outflows, around $1.1 billion over recent weeks, appears to originate from bankrupt crypto lender Genesis. This observation suggests a correlation between outflows from GBTC and inflows into Genesis.
Genesis announced on March 19 that it would be returning assets to creditors “in kind,” indicating that the defunct lender would be selling GBTC shares for Bitcoin. This decision aligns with Genesis receiving court approval in February to liquidate its $1.3 billion worth of GBTC shares to repay creditors.
In a similar move, bankrupt cryptocurrency exchange FTX sold 22 million GBTC shares valued at nearly $1 billion, completely liquidating its holdings, showcasing a trend of significant outflows from GBTC linked to bankruptcies in the crypto industry.
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