Grayscale Investments continues to sell Bitcoin after converting its Grayscale Bitcoin Trust into an exchange-traded fund (ETF). Experts have mixed opinions on what this could mean for Bitcoin’s price in 2024. It was revealed that Grayscale sold Bitcoin in several parts last week due to investors shifting to lower-fee ETF products and some withdrawing their funds.
Following the U.S. Securities and Exchange Commission’s approval of Grayscale’s ETF application, the arbitrage between GBTC shares and the net asset value of the Bitcoin they hold disappeared. Authorized participants with ETF shares were forced to sell Bitcoin when GBTC share prices fell below the fundamental value of Bitcoin, leading to a drop in Bitcoin prices.
Grayscale transferred 8,730 Bitcoin to Coinbase Prime on January 16, 2024. Four days prior, assets worth $41 million were moved to a Coinbase Prime wallet, possibly following an earlier sale. Senior ETF analyst at Bloomberg, Eric Balchunas, estimates that the Trust saw outflows of $95.1 million and $484 million on January 11 and 12, 2024, respectively.
Bitcoin analyst Chris J. Terry argues that if Grayscale continues selling, it could be one of the largest strategic mistakes in crypto history, due to the higher transaction fees demanded by BlackRock’s iShares Bitcoin Trust. He expects Bitcoin prices to remain flat or decrease before any potential liquidation of GBTC.
However, Galaxy Digital CEO Mike Novogratz disagrees with Terry’s thesis, expecting Bitcoin prices to stabilize within six months as investors move their money to other funds. He believes investors are unlikely to cash out GBTC without considering other Bitcoin investments, anticipating a shift to other ETF products and a subsequent rise in Bitcoin prices after a period of adjustment.
