Crypto asset manager Grayscale’s Bitcoin exchange-traded fund (ETF) recorded one more day of mass outflows. The volatility started five days ago, with the Bitcoin ETF outflows reaching $642 million on March 18. On March 21, nearly $359 million exited the Bitcoin ETF.
The total outflows for Grayscale’s Bitcoin ETF for this week amount to $1.8 billion. According to data from Farside Investors, outflows for March 18, 19, and 20 were $154 million, $326 million, and $261 million, which means some Bitcoin ETFs generated inflows. Still, the net total weekly outflow for all Bitcoin ETFs is currently $836 million, not including data for today. There have been outflows across all Bitcoin ETFs four days in a row.
The exodus could be coming to an end
The mass Bitcoin ETF outflows suggests that investors are taking profit and the Bitcoin ETF hype has ended, at least temporarily. According to analyst Eric Balchunas, quoted by Cointelegraph, a lot of Grayscale’s outflows could soon come to an end because most come from insolvencies of crypto firms due to their “consistency and size.”
As of March 21, Grayscale Bitcoin Trust’s total AUM amounted to $23.2 billion. It has lost $13.6 billion since it became an ETF on Jan. 11.
Market consolidation
According to Singapore-based QCP Capital, there is market consolidation with Bitcoin and Ethereum changing hands in a “relatively tight range.” After the volatility last weekend, it looks like the market will take a break.
Is Genesis the main source of outflows?
According to a pseudonymous researcher, insolvent crypto lender Genesis seems to be the source of outflows of around $1.1 billion from Grayscale’s Bitcoin ETF over the last few weeks. He claims the timing and volume of funds moving out of GBTC and into Genesis “match pretty well.” There is probably a connection between Bitcoin ETF outflows and Genesis inflows.
On March 19, Genesis issued a statement that the company would be repaying creditors “in kind,” which means Genesis will sell Grayscale Bitcoin ETF shares for Bitcoin. The company received a court’s approval to start liquidating its GBTC shares to repay creditors. They are worth $1.3 billion.
About a month earlier, FTX liquidated all of its holdings, selling 22 million GBTC shares worth almost $1 billion.
Bitcoin remains overbought
The cryptocurrency market underwent asharp correctionlast week. Bitcoin lost more than 15% of its value, then recovered after the Federal Open Market Committee (FOMC) meeting on March 20. As the flagship crypto still appears overbought, the selloff may not be over, according to a report by JPMorgan cited by CoinDesk.
According to the bank’s analysts, the market remains considerably optimistic, expecting prices to rise significantly by the end of the year. A lot of that optimism comes from the belief that demand via spot Bitcoin ETFs will continue at the same pace, while the Bitcoin supply will drop after the halving event.
However, JPMorgan notes that net inflows into spot bitcoin ETFs are declining, which challenges the view that one-way net ETF inflow is sustainable. Profit taking will probably continue as the halving approaches, especially as Bitcoin still looks overbought despite last week’s correction, the analysts conclude.
Is approval of spot ether ETFs near?
According to QCP, the prospect of near-term spot ether ETF approval is starting to impact the market. A contract on Polymarket is trading with a 21% likelihood that an ETF will be approved by May 31.
The US SEC is currently investigating the Ethereum Foundation on grounds that ether is a security. The regulator has not responded to requests for important documents that would yield insight into its views on the matter, which CoinDesk made based on the Freedom of Information Act.
