GBTC’s current sell-off is being impacted by the failures of cryptocurrency exchange FTX, which are highlighted in the Bitfinex report.
A new market report from Bitfinex reveals that the failure of the exchange FTX partially caused a substantial sell-off of Grayscale Bitcoin Trust exchange-traded fund (ETF) shares, which had a significant impact on the price drop in Bitcoin in January 2024.
The realization of profits following Grayscale’s successful conversion of its GBTC trust to an ETF was a considerable influence on the marketwide drop that drove Bitcoin from $48,700 to $38,600 in a matter of days, according to the update from Bitfinex Alpha.
This correction took place in a matter of days. According to the research, GBTC had outflows totaling $4.3 billion after it converted to a spot Bitcoin exchange-traded fund on January 16.
On the other hand, BlackRock’s iShares Bitcoin Trust (IBIT) had total net inflows of $1.82 billion, making it the individual spot Bitcoin exchange-traded fund that received the most significant net inflows.
Bitfinex analysts also bring attention to the impact of ETF flows on the price of Bitcoin. This is demonstrated by the fact that there was no flow of funds into the corresponding spot of the Bitcoin ETF on Saturday, January 20.
Although it has decreased from $28.6 billion before its conversion, Grayscale’s GBTC continues to be the largest Bitcoin exchange-traded fund (ETF), with its total assets under management hovering around the $24 billion mark.
Additionally, the Bitfinex report mentions that converting Grayscale’s trust into a spot Bitcoin exchange-traded fund (ETF) made it easier for the cryptocurrency exchange FTX, which had gone bankrupt, to sell large shares of its own.
The FTX company liquidated its shares by selling 22 million GBTC shares, which had a value of over one billion dollars. Bitfinex Alpha also highlights the impact of spot Bitcoin exchange-traded fund fees as another element to consider.
According to the research, Grayscale’s adversaries currently charge costs that range from 0.2 percent to 0.9 percent, whereas Grayscale charges 1.5 percent.
“This higher fee structure may be influencing investors to migrate away from GBTC and towards other exchange-traded funds (ETFs), particularly towards traditional finance (TradFi) giants that have more experience in managing ETFs.”
The experts believe that investors are seeking ways to obtain exposure to Bitcoin that are more cost-effective. This has influenced the movement of capital inside the Bitcoin exchange-traded fund (ETF) industry, which is still in its infancy.
As January draws to a close, the data from exchange-traded funds (ETFs) indicates that the flow of cash between the various ETF funds is starting to settle down.