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GBTC Bleeds Another $443 Million as Bitcoin Price Drops Below $61,000

Bitcoin suffered a notable price plummet amidst ongoing withdrawals from Grayscale’s converted GBTC spot Bitcoin ETF.

Based on CoinMarketCap data, the primary cryptocurrency plummeted to as low as $60,800 on Tuesday, marking a 17% drop from its peak value.

The price downturn for Bitcoin ensued following a substantial outflow of $643 million from the $25 billion Grayscale Bitcoin Trust (GBTC) on Monday, marking its most substantial exit since its transition to an ETF on January 11.

On Tuesday, these investment vehicles witnessed an additional $326.2 million in net outflows.

Particularly, Grayscale’s GBTC experienced an outflow of $443 million.

In contrast, ETF offerings from BlackRock and Fidelity recorded modest inflows of $75.2 million and $39.6 million, respectively.

Over $650 Million Liquidated as Bitcoin Remains Volatile

CoinGlass data reveals that both long and short traders incurred losses exceeding $650 million across major centralized exchanges within the last 24 hours.

To be specific, a staggering 189,935 traders faced liquidation, with total long liquidations amounting to $491 million and short liquidations totaling around $165 million.

Among these exchanges, OKX led the liquidations with over $271 million, followed by Binance at $229 million and Bybit at approximately $104 million.

In the realm of Bitcoin-tracked futures, both short and long liquidations surpassed $229 million over the past day, while Ethereum-linked futures witnessed liquidations exceeding $157 million.

Previously, spot Bitcoin ETFs had been shattering records, propelling Bitcoin’s price to unprecedented highs. However, recent outflows indicate a shift in investor sentiment and a more cautious approach.

One potential influencer of investor behavior is the forthcoming decision by the Federal Reserve, set to be announced on Wednesday. While expectations suggest no alterations to the benchmark interest rate presently, concerns persist regarding future rate adjustments, particularly in the face of persistent inflation.

Such a scenario may not bode well for Bitcoin bulls, prompting investors to adopt a more cautious, wait-and-see stance.

Grayscale to Drop Fees Overtime

Grayscale intends to progressively lower fees on its primary offering amidst significant outflows totaling $12 billion. CEO Michael Sonnenshein revealed that the cryptocurrency fund manager foresees fee reductions for the Grayscale Bitcoin Trust ETF over the next few months as the cryptocurrency ETF market advances.

In an interview with CNBC, Sonnenshein affirmed that as the market progresses, fees associated with GBTC will diminish. Grayscale had previously justified its above-average fees, citing the norm of higher charges for nascent products in their initial phases.

Sonnenshein anticipates a parallel pattern for GBTC, with fees dwindling as the fund expands and the market matures. Since its transition to an ETF in early January, GBTC has encountered outflows surpassing $12 billion.

Sonnenshein acknowledged that the outflows were anticipated due to various factors, including investors seeking to capitalize on profits, arbitragers exiting the fund, and individuals unwinding positions associated with bankruptcies and forced liquidations.

According to industry experts, the insolvency of cryptocurrency behemoth FTX has significantly influenced the sell-off of GBTC. FTX, a major holder of GBTC, filed for bankruptcy in November 2022, and the FTX bankruptcy estate purportedly liquidated the majority of its shares in Grayscale’s bitcoin ETF.

“We’re essentially at the end of that initial phase now, where the pent-up demand for buying has hopefully been met, along with the pent-up demand for selling,” Sonnenshein remarked. “And now we’re transitioning towards the second and third phases, where a considerable portion of the market has yet to tap into these products.”

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