Bitcoin is currently trading at $40,600 following a drop on January 12, accelerated by sales after ETF approvals and increased outflows from Grayscale. The leading cryptocurrency faces downward pressure due to massive BTC transfers from asset manager Grayscale to the Coinbase exchange. The inability to redeem shares in the Grayscale Bitcoin Trust (GBTC) has created fluctuations in its premium to the underlying asset value, leading to trading at a negative premium in 2021 and resulting in significant issues for GBTC.
Investors, who had been awaiting an ETF approval, rushed to sell their GBTC shares once the negative premium disappeared. This has led to a rapid continuation of outflows, with Grayscale’s Bitcoin reserves decreasing by approximately $5 billion. These assets are being sold via over-the-counter (OTC) transactions through Coinbase to other ETF issuers or investors, which in turn negatively impacts market sentiment.
Experts have varied views on the situation. Galaxy’s research director, Alex Thorn, claims total GBTC outflows amount to $700 million, but considering Alameda’s sales alone are estimated at $1 billion, a net outflow of $2 billion seems more plausible. Bloomberg Intelligence’s Eric Balchunas warns that the scale of sales coming to Coinbase could be too large for other ETF players to absorb.
Despite the outflows, GBTC still holds assets worth over $20 billion, and the negative premium has dropped below 0.3%. The current sentiment among investors suggests a potential test of support levels below $40,000 for Bitcoin. Material Indicators noted increased bids around the $38,500 region, indicating a potential for further drops, possibly down to $35,000, following market openings in the U.S.
Former BitMEX CEO Arthur Hayes is among those anticipating a further decline in Bitcoin’s price, aligning with the cautious outlook from market analysts and the observed order book liquidity.