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GBTC’s $5B Flight Triggers Global Outflows: CoinShares

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GBTC's $5B Flight Triggers Global Outflows: CoinShares

A drop in the price of cryptocurrencies has led to outflows from digital asset investment products in Europe and Canada, possibly due to the outflows from the Grayscale Bitcoin Trust (GBTC) in the US, according to CoinShares. The substantial outflows from Grayscale, totaling $5 billion, have likely prompted further outflows in other regions. During the trading week of Jan. 22 to Jan. 26, digital asset products from Switzerland and Germany experienced the biggest outflows at $59.8 million and $31.7 million, respectively. Canadian digital asset products have seen the largest outflows over the month at $209.8 million, followed by Germany and Sweden at $124.5 million and $34.2 million, respectively. Only Brazilian digital asset products recorded major inflows last week, with $10.3 million.

The second full week of spot Bitcoin ETF trading in the US contributed to an outflow of nearly $500 million, despite the nine “new” spot Bitcoin ETFs receiving nearly $1.8 billion in inflows. This was not enough to compensate for the outflows from Grayscale’s converted spot Bitcoin ETF, GBTC, which saw over $2.2 billion in outflows over the week. The outflows from GBTC are starting to decrease as its daily outflows continue to reduce. Previously, GBTC offered a profitable trade for investors who borrowed money to enter the fund and made a profit on the Grayscale premium. This trade disappeared when the premium suddenly turned into a discount in February 2021. Many investors were trapped in the fund due to the six-month lock-up period imposed on GBTC shares, causing them to hold onto their shares at a declining discount.

Following GBTC’s conversion to a spot Bitcoin ETF, the discount has dropped from 1.55% to 0% on Jan. 26. While GBTC has seen $5 billion in outflows this month, the newly issued spot Bitcoin ETFs have received $5.94 billion in inflows since they started trading on Jan.

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