GBTC Outflows: The End in Sight?

Grayscale’s Bitcoin exchange-traded fund (ETF) has experienced significant outflows, with nearly $359 million leaving the fund on March 21. This comes after a week of large outflows, with $642 million leaving on March 18, the largest day of outflows ever recorded. In total, this week’s outflows for GBTC have reached $1.8 billion, marking the fourth consecutive day of net outflows across all 10 Bitcoin ETFs. Analysts believe that the outflows could soon slow down. Senior Bloomberg ETF analyst Eric Balchunas suggests that the majority of Grayscale’s outflows are coming from bankrupt crypto firms, which may soon come to an end. He also notes that the market has held up due to cash from Gemini/Genesis outflows being used to buy Bitcoin. As of March 21, Grayscale’s Bitcoin Trust held $23.2 billion in assets under management. Since being converted to an ETF on January 11, GBTC has lost $13.6 billion.

Independent researcher ErgoBTC suggests that around $1.1 billion worth of GBTC outflows in recent weeks likely came from bankrupt crypto lender Genesis. The timing and volumes of funds out of GBTC and into Genesis appear to match up. Crypto market commentator WhalePanda agrees with this sentiment, pointing to a statement from Genesis on March 19 stating that they would be returning assets to creditors by selling GBTC shares for Bitcoin.

It is worth noting that Genesis previously received approval from a US court to liquidate its $1.3 billion worth of GBTC shares to repay its creditors. Another bankrupt cryptocurrency exchange, FTX, recently sold all of its holdings by liquidating 22 million GBTC shares valued at nearly $1 billion. These activities may be contributing to the overall outflows seen in Grayscale’s Bitcoin ETF.

While Grayscale’s Bitcoin Trust has experienced significant outflows recently, there is speculation that the worst may be coming to an end. The outflows are likely driven by bankruptcies of crypto firms, and once this trend subsides, the market may stabilize. Grayscale continues to hold a substantial amount of assets under management despite the outflows, indicating ongoing investor interest in Bitcoin.