Key Points:

• Bitcoin edges close to $42,000 amid reduced Grayscale Bitcoin Trust outflows, easing recent price declines.
• Conversion of GBTC to an ETF prompts a $4.8 billion outflow, causing a 20% Bitcoin value drop since January 11.

Bitcoin is edging closer to the $42,000 mark Grayscale Bitcoin Trust outflows slow down, offering a glimmer of hope to investors amid a recent two-week downturn in the cryptocurrency’s value.

Read more: Grayscale Spot ETF: Basic Knowledge and Positive Future Outlook

Bitcoin Inches Toward $42,000 as Grayscale Bitcoin Trust Outflows Ease

Since the conversion of the more than decade-old Bitcoin portfolio into an exchange-traded fund (ETF) on January 11, approximately $4.8 billion has exited the fund, a move that saw Bitcoin’s value plummet by roughly 20% over the same period.

The transformation of GBTC from a closed-end format has disrupted popular arbitrage trades, prompting disposals by entities like the bankrupt FTX exchange. Daily Grayscale Bitcoin Trust outflows peaked at $641 million on January 22 before tapering to $394 million by January 25.

BlackRock‘s IBIT and Fidelity‘s FBTC have emerged as leading buyers of Bitcoin among spot BTC ETFs post their trading launch, followed by Bitwise Bitcoin ETF (BITB) and ARK 21Shares Bitcoin ETF (ARKB).

According to Reuters, several hedge funds foresaw the approval of a spot Bitcoin ETF and invested in GBTC between 2021 and 2023. Their anticipation of regulatory approval, coupled with Grayscale’s persistent efforts since 2016 to convert its trust into an ETF, paid off when the SEC greenlit U.S.-listed ETFs tracking bitcoin.

Initially trading at a nearly 50% discount to its underlying assets in December 2022, Grayscale’s trust gained momentum after the court ruled in its favor in August 2023, gradually closing the price gap.

Roughly 20 hedge funds, varying in size, capitalized on this trade opportunity, leveraging the potential gains associated with ETF approval. However, the precise details of these trades remain shrouded in confidentiality, with a market maker shedding light on the discreet nature of these dealings.

Bitcoin

GBTC

Grayscale

Grayscale Bitcoin Trust

Spot Bitcoin ETF

Author

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.

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Bitcoin

Grayscale Bitcoin Trust Outflows Slowly Helps Bitcoin Recover Around $42,000

Key Points:

• Bitcoin edges close to $42,000 amid reduced Grayscale Bitcoin Trust outflows, easing recent price declines.
• Conversion of GBTC to an ETF prompts a $4.8 billion outflow, causing a 20% Bitcoin value drop since January 11.

Bitcoin is edging closer to the $42,000 mark Grayscale Bitcoin Trust outflows slow down, offering a glimmer of hope to investors amid a recent two-week downturn in the cryptocurrency’s value.

Read more: Grayscale Spot ETF: Basic Knowledge and Positive Future Outlook

Bitcoin Inches Toward $42,000 as Grayscale Bitcoin Trust Outflows Ease

Since the conversion of the more than decade-old Bitcoin portfolio into an exchange-traded fund (ETF) on January 11, approximately $4.8 billion has exited the fund, a move that saw Bitcoin’s value plummet by roughly 20% over the same period.

The transformation of GBTC from a closed-end format has disrupted popular arbitrage trades, prompting disposals by entities like the bankrupt FTX exchange. Daily Grayscale Bitcoin Trust outflows peaked at $641 million on January 22 before tapering to $394 million by January 25.

BlackRock‘s IBIT and Fidelity‘s FBTC have emerged as leading buyers of Bitcoin among spot BTC ETFs post their trading launch, followed by Bitwise Bitcoin ETF (BITB) and ARK 21Shares Bitcoin ETF (ARKB).

According to Reuters, several hedge funds foresaw the approval of a spot Bitcoin ETF and invested in GBTC between 2021 and 2023. Their anticipation of regulatory approval, coupled with Grayscale’s persistent efforts since 2016 to convert its trust into an ETF, paid off when the SEC greenlit U.S.-listed ETFs tracking bitcoin.

Initially trading at a nearly 50% discount to its underlying assets in December 2022, Grayscale’s trust gained momentum after the court ruled in its favor in August 2023, gradually closing the price gap.

Roughly 20 hedge funds, varying in size, capitalized on this trade opportunity, leveraging the potential gains associated with ETF approval. However, the precise details of these trades remain shrouded in confidentiality, with a market maker shedding light on the discreet nature of these dealings.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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