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Bitcoin ETFs Return To Outflows Amid GBTC Sale Revival

Bitcoin ETFs experienced their initial day of overall outflows for February on Wednesday, indicating a potential decline in enthusiasm surrounding these investment options.

Data gathered from BitMEX Research reveals that the Grayscale Bitcoin Trust (GBTC) recorded $199.3 million in outflows on Wednesday, marking its most substantial daily outflow since January 30. This surpassed the inflows into all other Bitcoin ETFs combined, as several of them reported zero flows on that day.

Grayscale Bitcoin ETF Returns To Selling

In contrast, BlackRock’s fund attracted $96.5 million in flows, while Fidelity garnered $52.5 million in flows. Collectively, all ETFs experienced a net outflow of $35 million.

The previous day with a net outflow for the ETFs was on January 25, a period when the crypto market was still in a “sell the news” phase following the ETFs’ launch just two weeks earlier. At that time, BTC was trading around $39,900. However, it has since surged to $52,000 amidst a significant influx of ETF inflows over the subsequent month.

Grayscale has encountered continuous outflows since transitioning into an ETF, with many early investors capitalizing on the former arbitrage opportunity between the value of its shares and the underlying BTC. Meanwhile, those returning to BTC trading have little motivation to repurchase GBTC now that BlackRock’s ETF is accessible. BlackRock’s ETF features significantly lower management fees and trades with substantial volume, posing as a competitive alternative.

Where Is The Sell Pressure Coming From?

Additionally, bankrupt crypto lender Genesis, which shares a parent company with Grayscale in Digital Currency Group (DCG), received approval earlier this month to liquidate over $1.3 billion worth of its GBTC holdings.

“Following court approval for the sale, GBTC outflows picked up after weeks of decline,” tweeted Thomas Fahrer, co-founder of ApolloSats. “While it can’t be confirmed, there’s a high likelihood they’ve already commenced selling.”

Since their inception, Bitcoin ETFs have attracted $5 billion in net flows, equivalent to 104,799 BTC.

On Thursday, the European Central Bank (ECB) published a blog post dismissing Bitcoin despite the existence of ETFs, describing the asset’s rally post-approval as a dead cat bounce.

“Bitcoin has failed to fulfill its promise of becoming a global decentralized digital currency and is still rarely used for legitimate transfers,” the central bank asserted. “The recent ETF approval does not alter the fact that Bitcoin is unsuitable as a medium of exchange or investment.”

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