- Bitcoin price has risen over the past five days after falling in early January.
- Grayscale outflows are showing signs of slowing, with some analysts predicting that Bitcoin selling pressure will ease.
Bitcoin is rebounding from this month’s price slump as outflows from Grayscale’s Bitcoin Trust, the biggest driver of the cryptocurrency’s price decline, have slowed.
Bitcoin has rallied 10% over the past five days after falling about 20% from its high of $49,000 in early January.
Since January 25, the world’s leading cryptocurrency has risen from $39,900 to around $43,400.
The recent downturn has been linked to changes in market dynamics with the approval of 11 spot Bitcoin exchange-traded funds in the US.
Stay ahead with our weekly newsletter
Grayscale’s GBTC is the largest of the approved services, with $20.8 billion in assets under management.
Analysts say factors such as forced sales related to FTX real estate over the past two years and profit-making investor strategies related to GBTC discounts were major contributors to the outflow.
These outflows, combined with the generally bearish macroeconomic outlook, are hurting Bitcoin’s price. The Grayscale ETF has seen about $5 billion in outflows since its inception on January 11th.
On January 23, it reached $640 million per day.
Join our community for the latest stories and updates
According to cryptocurrency analysis firm Kaiko, Grayscale currently earns an average of nearly $500 million every day. This is a 22% decrease.
“The good news is that trading volumes and outflows are showing signs of slowing, providing much-needed support to Bitcoin,” said Kaiko analysts. “While outflows from GBTC are expected and are partially offset by inflows to other newly launched spot ETFs, the impact on sentiment is significant.”
GBTC outflows were partially offset by inflows into newly launched spot ETFs.
Meanwhile, total inflows into newly launched U.S. Bitcoin ETFs rose to $1.8 billion, according to data from digital asset management firm CoinSshares.
A reduction in GBTC outflows would ease “downward pressure” on Bitcoin’s price, JPMorgan said last week.
Bloomberg analyst James Seifert takes a more nuanced view.
“ETFs are not themselves markets,” Seifert tweeted. “Yes, they are a big piece of the pie right now, but there is more to the pie than that. Inflows to a Bitcoin ETF can coincide with a decline in Bitcoin price. Outflows can cause an increase in price It can happen at the same time.”
The rotation of funds from GBTC to newly issued ETFs raises questions about the nature of these inflows, whether they represent an influx of new capital into the market or just a transition between investment products. said Kaiko.
We expect a clearer picture to emerge in the coming months as the fund matures and market makers signal their entry.
Virtual currency market movements
- Bitcoin is trading at $43,503, up 3.09% in the past 24 hours.
- Ethereum rose 2% over the same period to $2,311.
- Avalanche and Solana fell 6.1% and 8.8%, respectively.
what we are reading
Sebastian Sinclair is DL News’ market correspondent. Any tips? Please contact Seb at firstname.lastname@example.org.